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Bank of Cyprus Receives Notable Ratings Upgrade By Fitch

In a remarkable financial development, Fitch Ratings has elevated the ratings of the Bank of Cyprus Public Company Limited (BoC) from ‘BB+’ to ‘BBB-‘, indicating a strong positive outlook. This upgrade underscores the bank’s enhanced asset quality and robust capitalization.

The rating improvement is largely attributed to the bank’s strategic reduction in problematic legacy assets, such as non-performing exposures (NPEs) and net foreclosed properties. This has enabled a healthier capital structure with reduced encumbrance by unresolved problem assets.

Fitch notes that despite lowering interest rates, BoC’s profitability remains solid thanks to its competence as the largest domestic bank in Cyprus. With consistent deleveraging, it is poised for ongoing financial stability.

Prospective Economic Growth For Cypriot Banks

The favorable outlook anticipates better business and financial prospects amidst Cyprus’s economic growth, with decreasing unemployment and lower private sector debt. BoC’s plans to expand into wealth management and insurance activities stand to gain from these economic trends.

Expectations are that the ratio of BoC’s problem assets will drop below 5% within two years, thanks to diminishing NPE portfolios and active disposals of foreclosed assets. Last year, the bank’s operating profit/risk-weighted assets (RWA) ratio was a robust 5.4%, indicating a sustainable path forward.

Financial Strength And Stability

By the end of 2024, BoC boasted a common equity Tier 1 (CET1) ratio of 19.2%, with a notable buffer over regulatory demands. The bank’s CET1 encumbrance by problem assets fell significantly owing to further disposals.

Supported by a strong Cypriot deposit base, BoC maintains excellent liquidity. Looking ahead, while a downgrade is improbable, Fitch warns that any economic downturn in Cyprus could impact ratings. However, further elevation of the operating environment for Cypriot banks could enhance BoC’s business profile.

If you’re curious about technological advancements in Cyprus, read AI At Work: Cyprus Among Europe’s Most AI-Skeptical Nations.

Binance Details Months-Long Cyberattack Behind $6.34 Billion Crypto Theft

Binance has disclosed how attackers used fake software downloads, fraudulent job interviews and compromised internal tools to breach its wallet infrastructure in an October 29 cyberattack that resulted in the theft of more than $6 billion in digital assets.

The incident was not caused by a single employee mistake, Binance co-CEO Richard Teng told CNBC’s “Squawk on the Street”. Instead, attackers spent months building access before reaching the system responsible for authorising wallet transactions.

“They spent months building their way in,” Teng said, describing a sequence involving a compromised developer tool, malware hidden in a coding exercise and access to internal AI systems.

How Attackers Reached Binance’s Wallet Infrastructure

According to Binance’s security report, the operation began in June when a Wallet DevOps engineer downloaded a modified Homebrew installation while searching online for a popular AI coding tool.

Binance detected suspicious activity, replaced the engineer’s device and rotated credentials. However, the company said the engineer’s role and the work of colleagues on the wallet infrastructure team had already been exposed.

In September, attackers allegedly posed as recruiters and interviewed another engineer. A coding exercise contained hidden malware designed to evade security controls, Teng said. The attackers subsequently moved through internal AI tools and gained access to the system authorising wallet transactions.

Teng did not directly attribute the attack to North Korea, but said the FBI had linked it to North Korean hackers associated with the TraderTraitor group.

Binance Recovers Most Affected Assets

Binance said it has replenished 98% of the $6.34 billion in affected assets and is working to acquire the remaining, less-liquid holdings. The exchange temporarily restricted certain withdrawals, committed to covering customer losses and used its reserves to restore affected funds.

The company and industry partners, including Tether, Circle and Ripple, have reportedly frozen around $3 billion in assets. However, some stolen funds continue to move through laundering channels.

Coinbase has also blocked transfers to compromised wallets and offered assistance to Binance.

Security Overhaul And Industry Confidence

Following the breach, Binance rebuilt the affected wallet system and internal AI tool, replaced compromised devices, revoked credentials and tokens associated with the engineers involved, and expanded security scans across employee devices.

The exchange has also commissioned an independent expert to review its response and security measures. Teng said Binance would continue strengthening its defences while working with law enforcement and industry partners to trace and freeze the stolen funds.

The incident has renewed questions about the security of centralised crypto exchanges. Although Binance maintains that it remains financially sound, attention is now focused on recovering the remaining assets and demonstrating that its security controls can withstand increasingly sophisticated attacks.

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