Daily Press Review - 13/3/2019

New balances between old and new shareholders

Phileleftheros says that there is a change in the balance of power between old and new shareholders. Furthermore, the unexpected entry of the investment firm 7Q and the possible involvement of  trade union ETYK’s employees through their provident fund has also introduced new balances. Hellenic Bank’s BoD will convene on Thursday 14 March with regards to making available New Regular Shares that correspond to the non-exercised preference rights and will also make them available for private placement.  Possibly on that day, the Bank’s shareholding structure will also be announced. On Monday 18 March, a letter will be sent for the concession of the new regular shares that emerged from the exercise of preference rights and the private placement. The Bank’s Board, at its discretion, can give Demetra additional new regular shares which haven’t been registered due to the non-exercise of preference rights during the exercise period. On the basis of a press release, the agreement between the Bank and Demetra presupposes that the completion of Demetra’s registration will happen on the third working day after the written confirmation by the Bank that the latter condition (conditions precedent) has been satisfied or revoked by both parties or during any other day that has been agreed by the Bank and Demetra. Demetra’s share percentage is expected to rise to between 20.09%-22.1%, with the completion of the share capital increase. Poppy Sarl, which is linked to Pimco, will be added to Hellenic Bank’s’ managing structure. This is expected to take place until 31 March. Hellenic Bank’s biggest shareholder, the American hedge fund Third Point, has sold its preference rights and is expected that its percentage will be reduced from 26% to 11%. Essentially, its seems that Emma Alpha will not become a shareholder if all the preference rights are exercised. If everything goes according to plan, then Wargaming and Demetra will become the Bank’s new major shareholders, thereby controlling the Bank. The interest is turned to the next annual meeting, which hasn’t been set yet. It is appreciated, that there will be changes in the Board of Directors, which will be comprised of representatives of all the shareholders.



The net is closing in on Harris

Kathimerini Economy reports that as much as the government and DISY wish to blame the pre-2013 period for the Co-op’s collapse, the opposition does not seem willing to put an end to the chapter of the findings report which presents Harris Georgiades as the major offender for the Co-op’s situation in the post-2014 period. On the contrary, the opposition has taken full advantage of the situation, asking for assumption of responsibilities and mainly pushing for the resignation of the Minister. AKEL wishes to transfer the discussion on the Inquiry report to the House Plenary, while DIKO has suggested that it may not support the government in its crucial reforms in the case where Harris doesn’t quit. The biggest looming question is whether DIKO will actually materialise its threats and reject the government’s crucial reform scheme due to the fact the Harris’ has not resigned from his position as Minister of Finance. The article goes on to remind readers that a large portion of DIKO’s members, had insisted last summer that Georgiades should have quit after the deal between Hellenic Bank and the Co-op was reached. What is certain is that DIKO will support AKEL’s proposal for a discussion of the findings report at the Parliament, while it will also support the proposal for the publication of Politically Exposed Persons’ NPLs and loan write-offs.



 “The Co-op deal wasn’t a negative development”

In an interview with Euronews, MoF Harris Georgiades defended the decision to sell the good part of the Co-op to Hellenic Bank saying that he understands the reactions when it comes to the sale of the Co-op. “The government and I consider what happened positive,” he said of the sale to Hellenic Bank. “It was not a negative development. It was certainly a difficult decision politically.” The minister said he understood the reaction but reiterated it was a necessary decision which has “bolstered our banking system” and prompted ratings agencies to place Cyprus on investment grade after a long time. “This decision was welcomed by the European Commission, the European institutions, so it was a difficult, (and) favourable and for this positive decision of course we assume responsibility.”



“They left me without life insurance”

A concerned reader writes to Phileleftheros saying that after the Co-op’s collapse, their life insurance was cancelled. They argue that Hellenic Bank has kept the clients who have loans and life insurance, while the people who had repaid their loans were prompted to continue being part of a collective insurance plan and were left without insurance because they had been simply written off. The reader says that they told him that if he wanted to continue having life insurance, he should proceed to a new contract with new terms. The column’s consultant on insurance, after studying the contents of the reader’s letter, told his opinion on the matter. As he explained, the Co-op previously had an agreement with another insurance company but after a competition, they proceeded to an agreement with the company that the reader refers to. Through this company, they offered collective insurance to all the people who had loans at the Co-op and at the same time gave the opportunity to people who repaid their loans to continue if they wished, to continue with the specific collective life insurance. After the Co-op however closed down, the specific agreement was terminated. Hellenic Bank is cooperating with other insurance companies. If the reader speaks with Hellenic Bank, asking for life insurance, the Bank will most likely refer him to one of its associate insurance companies.



Overcharges in Co-op loans that were transferred to HB

Financial Ombudsman, Pavlos Ioannou, indicated that there are overcharges in some of the Co-op loans that were transferred to Hellenic Bank. Ioannou is currently negotiating with the involved parties in order to find a solution to the problem. He revealed the matter yesterday at a House Finance Committee meeting, without however presenting any concrete information on how many loans have been affected and what is the total amount of the overcharges. Pavlos Ioannou reported that he sent a letter to KEDIPES, the former Co-op, but hasn’t gotten any reply as of yet. According to Ioannou, Hellenic Bank showed interest in solving the problem, however KEDIPES still hasn’t replied to the letter. The Financial Ombudsman even warned that the state has a civil responsibility to compensate borrowers, highlighting that there is a relevant clause in the deal that was agreed with Hellenic Bank.

 

The tragedy of Iphigenia in the banking sector

The author argues that any political responsibilities for the break-up and sale of the Co-op, should be examined by the Presidential Palace, the Parliament and the parties and any civil responsibilities should be investigated by the Legal Service and the Police. The author however says that responsibilities should also be assumed by the Parliament, since this is a case of a bank that closed down. The author reminds readers that in 2015, the Parliament passed a law protecting primary homes under €350.00 from foreclosure and that this is when the Co-op’s fate was sealed. The author goes on to explain his rationale saying that the European Commission, after 3 September 2018. Said that the Co-op had failed because it didn’t manage to get anything from its many NPLs. As such, it didn’t manage to transform the NPLs into capital, through foreclosures, debt-to-asset swaps and all the various tools. Finally, the author says, we shouldn’t forget that Hellenic Bank was left with a bright future after the collapse of the Co-op. If it hadn’t been for the Co-op, he argues, the future of a small Bank like Hellenic, which had the business model of a big bank, may have not been so bright as it is now.

 

An era of recovery and restructuring

Kathimerini Economy’s author argues that the State will partially be compensated for the capital they put in the Co-op. This will happen with transfer of the ownership of assets that are now registered under SEDIPES. These assets concern different types of properties, plots, fields, as well as multi-purpose buildings. This stock of assets was acquired over the years, through the operations and investments of the various, numerous Co-operative Credit Institutions as well as the restructuring, which took place from 2014 to September 2018 and even later, excluding the assets that were transferred to Hellenic Bank, as a part of the acquisition of the Co-op’s good part. Hellenic Bank has a priority for the purchase of certain immovable properties for a specific period of time, without it being certain whether it will proceed to acquire these properties.

 

A second chance

The Financial Ombudsman yesterday underlined that borrowers who are rejected for debt restructuring through the government’s ESTIA scheme, will be able to turn to the Financial Ombudsman for mediation, since the code of the Central Bank is still valid for specific loans. He underlined that when applicants are rejected for ESTIA they should come to him and added that the Central Bank code should be respected. Ioannou said that after the Estia Scheme was announced, there was a decline in the number of applications for mediation. In the meantime, during yesterday’s discussion, it emerged that KEDIPES still hasn’t compensated borrowers for overcharges. As he said, some of the loans that were overcharged, were transferred to Hellenic Bank, but neither KEDIPES nor the Bank has said that they will pay back the borrowers. According to the Ombudsman, the Co-op hasn’t paid back borrowers what they had overcharged.

Karousos: Tourist traffic same as last year

Mayor of Ayia Napa Yiannis Karousos, expects that touristic traffic will be at the same level as in 2018 but he is optimistic that tourist flows will increase next year. Karousos said there is a general concern about the fact that tens of thousands of tourist arrivals could not be replenished by 2019 due to the closure of Germania and Cobalt. There is also a great deal of concern about the Brexit, since Media and tour operators are calling on people not to book their holidays this year until the issue is clear. However, everyone believes that when this major issue is resolved, the UK market will return to at least the same level as last year.



Business Leaders Summit 2019: Top Leaders in the Top Summit of the Year

At the Business Leaders Summit 2019 organised by the Bank of Cyprus. During the Summit, renowned entrepreneurs will discuss important issues of modern Cypriot economic reality and exchange views and practices through their professional experience and business leadership. Among them will be Menelaos Shacolas, Director of the CNS Group and member of the Board of Directors of Integrated Casino Resorts Cyprus.


Stricter punishment for illegal smokers

A concerned reader writes to Phileleftheros saying that even though the RoC has managed to impose deterring penalties on poachers, it hasn’t managed to enforce the smoking ban in bars and restaurants. The author of the column said that while poachers are being punished, so are smokers. The head of Public Health Services of the Ministry of Health said that Police can impose a fine up to €850 in cases where the smoking ban is violated. In case of a prosecution due to smoking in a prohibited space, a fine of up to €2,000 can be imposed. Smoking is forbidden in each interior or closed space in public buildings, financial institutions, universities. Smoking is also prohibited in the workplace.



Cyprus Shipping Agents Association protest on Larnaca port’s privatisation

The author reports on the protest of Cyprus Shipping Agents Association regarding Larnaca port’s privatisation. In a letter addressed to the Minister of Transports Mrs. Vassiliki Anastassiadou, the Cyprus Shipping Agents Association stressed the need to ensure Larnaca port’s commercial operations and protect those who are already using the port. Following the assignment to private investors of the development of the harbor and the marina, the Government should impose further obligations to the contracting parties, according the Cyprus Shipping Agents Association. Amongst other things, the obligations shall protect the ongoing commercial operations of the port, prevent any increases in charges to existing users of the port and ensure that the private concessionaire will serve the current users of the port without any distinction, with regards to the type or the size of cargo that is being traded.



Regulatory changes regarding marine fuel standards raises concerns

The shipping industry faces one of the biggest threats, as the UN International Maritime Organisation is changing the marine fuel standards, promoting regulatory changes. As of January 1, 2020, the limit for sulfur in fuel oil will be reduced to 0.50% m/m outside emission control areas (ECAs), from the current 3.5%. Nevertheless, these regulatory changes intended to address environmental issues raise worries concerning the sufficiency of the sulfur. There are concerns with regards to whether the amount of this new fuel type will be adequate to ensure the unimpeded operation and hence the profitability of the industry, in the long run. As an alternative to the IMO regulation is the use of scrubbers in the ship's engine, which is a mechanism that can reduce sulphur to the stipulated amount. But in this case there are reservations about both the cost of installation and the extent to which its use doesn’t have an impact on the environment. The deputy minister of Shipping, Mrs. Natasa Pilidou, said that this development was dubious in an interview on “Kathimerini” newspaper. As she added, there is a concern about the safety of the ships as well as the efficiency of sulphur.

 

Vasiliko port’s privatisation on track

Haravgi reports that the privatisation of the Vasiliko port is on track, since the Cyprus Ports Authority (CPA) has been forced to stop development projects due to the loss of revenue after the privatisation of the commercial activities in the Limassol port. This issue was revealed yesterday after a question by the AKEL spokesperson Mr. Stefanos Stefanou, to the members of the CPA at a meeting of the House Finance committee on the examination of the budget of the Authority for 2019. Specifically, the representatives of the CPA admitted that cuts were made in the development projects, including the project for the new port in Vasiliko, in order to balance the budget. Mr. Stefanou also added that because of the government cuts on shift and overtime allowances at the port of Larnaca, the port is unable to respond to increased needs.