By Stelios Orphanides

Ioannis Matsis, Hellenic Bank’s new top executive, said that excessive regulatory requirements for European banks discourage the consolidation of the Cypriot banking sector, the Cyprus News Agency (CNA) reported.

The acquisition of a locally regulated bank by a competitor regulated by the European Central Bank’s (ECB) Single Supervisory Mechanism (SSM) implies additional cost to turn the bought-out bank into a systemic institution supervised by the Frankfurt based body, he said according to the CNA. Matsis was addressing an audience at an event on Tuesday.

Hellenic Bank together with Bank of Cyprus, Cooperative Central Bank and RCB Bank, is jointly supervised by the Central Bank of Cyprus and the SSM since late 2014.

Banking regulation is very punitive and disproportional subjecting lesser euro area banks to the same regulatory requirements as major banks in the single currency bloc, Matsis, whose appointment as Hellenic’s chief executive officer received the ECB’s approval a week ago, said. Constantly changing regulation, he continued, also deters investment as it makes proper forecasting more difficult.

“Regulation has many different faces, some of them are good, we need to be disciplined, self-regulation works to a certain extent and as the crisis proved we needed more of it, but at the same time we have the pitfalls that come with the regulation” he was quoted as saying.