Daily Press Review - 27/2/2019

Seeking an agreement behind the scenes

Bank employees’ union (ETYK) and Hellenic Bank have proceeded to behind-the-scene negotiations in an effort to find a mutual solution on a series of subjects. The most crucial difference between the two parties is the union’s insistence to provide employees with their recurrent annual premium and the automatic adjustment by indexation (AAI). This is part of ETYK’s wider policy to bring salaries and benefits back to levels similar to 31^st December 2013. In the beginning of February, ETYK had sent a letter to Hellenic Bank’s management calling it to comply to their agreement obligations and give staff their annual premiums as well as the automatic adjustment by indexation (AAI). The two sides avoid to proceed to statements, intensifying their backstage negotiations in order to avoid a crisis. The bank’s management, the framework of renewing the collective agreement gave its own demands with regards to the payroll system and the automatic raises as well as with regards to general policies. The informal negotiations between the two sides will show whether there will be an immediate result. In the immediate future, it will be clarified whether the premiums and AAI will be integrated retro-actively in the staff’s February salaries.

 

CSE closes with losses on Tuesday

The Cyprus Stock Exchanges closed the day on Tuesday with a small drop.  The general index fell 0.28% to 60.50 points.. The value of transactions rose to €456.387. Logicom with €258.328 (€1.42 closing price, 1.43% increase) Bank of Cyprus with €62.903 (€0,997 closing price, 0,89% decrease), Hellenic Bank’s pre-emptive rights with €54.565  (€0.004 closing price, 7.89% decrease), Hellenic Bank  with €47.850 (€0.704 closing price, 0.57% decrease) and Demetra Investments with €3.782 (€0.47 closing price, 0.85% increase) attracted the biggest interest by investors.



Government looks into Co-op properties

Stockwatch reports that the government has started looking into the big commercial properties of the Co-op, with a view to realise whether they are suitable to house government services or to be given to the various communities who want them. The properties are managed by the Cyprus Asset Management Company (KEDIPES). A member of KEDIPES’s board and senior economic officer at the Minsitry of Finance, Dionysis Dionysiou told Stockwatch that the a technical committee has already made a list with 35 sizeable properties that the government could buy for government services or communities. According to information given publicly to the House, KEDIPES manages properties of a total value of €600m. The President of the Republic said a few months ago that some of the properties will be given to communities, without being specific about the procedure. The government supports in a recent letter to the House that the properties can be acquired by the government, in exchange for the Co-op’s debt to the state for supporting it with €.3.5b. The article goes on to say that communities have been pressuring the state so that they acquire former Co-op buildings and create Town Hall and other municipal buildings. As regards the communities, Dionysiou explained that there are “some commercial buildings that are currently being used by Hellenic Bank as bank branches; HB will keep a number of them, while the government will choose some of the remaining properties to be given to communities”. According to the agreement, Hellenic Bank can buy 113 properties worth a total of €150m, until the start of September (before Hellenic Bank and Co-op systems are merged). Hellenic Bank has already bought 12 properties worth €47m, he added. He clarified that as a first stage KEDIPES and Altamira were called to prepare a list with all the properties in communities that aren’t being used by anyone. However this doesn’t mean that all the properties will end up being used. He added that each property will be individually evaluated because it is possible that if the cost of renovation is bigger than the property’s value, it will not be chosen.



Banks pressured to adopt Co-op model on NPLs

Kathimerini reports that the division of the Co-op into two “good” and “bad” banks and the absorption of its “good” part by Hellenic Bank, was successful, even if it had resulted is some losses. While the revocation of the Bank’s banking license, allowing it to solely operate as a “bad” bank was deemed necessary, in essence this was a version of the recipe and not the original one. The original recipe stipulates dividing the portfolio of bank which has NPLs and giving them to a special management company which specialises in this market. The article reports that the Single Supervisory Mechanism is pushing Bank of Cyprus and Hellenic Bank towards this direction, so that by the end of 2019 they will have a tiny percentage or even no NPLs at all in their balance sheet. While it was considered that after the Co-op deal, the supervisors would be calming down and giving Cypriot banks more time to deal with their NPL problem, this will not happen. According to Kathimerini, there will be a lot of changes in the Cypriot banks, including either the creation of “bad banks”, or big sales of loans, depending on the bank. What Frankfurt asks from the Cypriot banking system is to rid banks from red loans, selling them to non-banking entities. The banking institutions will then have the time needed to manage loans. At the same time, it doesn’t matter if the bank creates a “bad” bank or sell these loans to special companies. Kathimerini’s sources tell the newspaper, that Bank of Cyprus which has more than €5b NPLs is heading towards the creation of an entity to which it will transfer these loans (bad bank), while Hellenic Bank will proceed to sell problematic loans of €1-1.5b. Only in this way they will manage to reach Frankfurt’s supervisory demands so that they enter the new year with 5% (or even less) problematic loans.

 

Easy Jet in negotiations for Paphos-Athens route

Easy Jet has proceeded to preliminary discussions with the Ministry of Transport, to include in the route Paphos – Athens its flight schedule. The gap was created after Cobalt collapsed last October. Since then, ticket prices for Athens have skyrocketed. Tourism actors are not optimistic that the situation will change without the introduction of a new aviation company.

 

More in March

Deputy Minister of Tourism during Cyprus Hotel Association’s conference referred to the steps need to be taken in 2019 and 2020 so as to further develop tourism. He stressed in particular that marketing is very essential to the whole strategy. He also referred to the establishment of a Strategy Committee consisting of private and public sector bodies as well as the need to approve parliamentary bills for the classification and licensing of hotels. He also stressed the importance of early re-negotiation contracts with tour operators and airlines which are expiring in 2020. He also said that work began on the new brand of Cyprus which is going to be announced in 2020.



Agreements with giants for seven new hotels

Sunny Seeker Hotels has reached various agreements with hotel conglomerates. The company is expected to add to its portfolio another four hotels by 2025, under the Radisson brand name. The first Best Western Hotel in Cyprus in Larnaca will begin construction in the first quarter of 2019.



Uncertainty about tourism due to Brexit, Turkey, Egypt and the Ruble

The President of the Cyprus Hotel Association during the Association’s annual conference mentioned that Cyprus tourism industry in 2019 has faced a lot of uncertainty due to Brexit, the traffic from Russia due to the Ruble’s diminishing power and rising competitiveness from Turkey, Egypt and other neighbouring destinations. To fight these issues, the Association proposed: voting the new Hotel Categorisation Framework which will promote the modernisation and upgrade of hotels, focus on large infrastructure projects, utilize accelerated training programmes with a focus on unemployed youth so as to upgrade the services offered and the development of thematic tourism. During the conference, the Minister of Commerce mentioned that due to policies implemented by the government, the country's tourism product has been greatly enhanced with major infrastructure projects such as marinas, golf courses and the integrated casino resort, while urban development incentives led to an increase in the number of Hotel rooms.



Pending issues at Elliniko

Even though the competitive tender for the casino license in Greece at Elliniko was announced this week, the business programme of the Hellenic Republic Asset Development Fund, approved a few days ago by the Greek government, lists major pending issues such as: the submission of a general plan for the green and other development zones, the completion of a competition that would grant the casino-license, and most importantly the issue of the ‘arbitrary buildings’ that are scattered through Elliniko. The article reports that Cosco, which is reportedly interested in investing €580 in the project, is still rather far away from its target.



Even betting needs a code

Following up National Betting Authority’s announcement for public consultation on the betting Code of Advertising, the writer brings up some points for discussion. According to the Code, betting advertising by any media should not present the choice to abstain from betting activity in a negative light. It is also worth noting that commercial broadcasting of ads within the TV family zone is prohibited. With regard to digital ads where age targeting is possible, the ads must be regulated in such a way so as to exclude their exposure to minors.

Differences to be discussed

Following the delay on personal doctors’ regulations at the Health Committee, the HIO and the Ministry of Health will today proceed with a meeting with CyMA in an effort to find convergences that will facilitate work of the Parliament. In the case where they don’t reach an agreement, the Health Committee will proceed with the procedure as normal, submitting the regulations to the plenary for a vote. CyMA went to the Parliament with a series of objections with regards to the regulations, thereby delaying the discussion. At the Parliament’s suggestion, the two sides will convene today and all the doctors’ objections will be discussed, with regards to specific matters related to the work of personal doctors in the GHS.

 

Last effort to reach agreement between HIO and CyMA

As above. Director of the Minister of Health office, Anastasia Anthou has made it clear that dialogue has to be focused on the substance of regulations and doctors should not come in with positions related to the GHS’ philosophy. However, as it has been reported, in the past weeks, nothing substantial will change since all sides have made their positions clear. The Head of the House Health Committee, Costas Constantinou has stated that the common interest should be above all so that the biggest health reform of the country is implemented.