Daily News Review - 08/02/2019

Friday, 8 February 2019

In today’s press:

Hellenic’s capital is stronger

Hellenic Bank announced yesterday that the European Central Bank (ECB) has approved the inclusion of the third quarter 2018 profit of €259.6m in the CET1 capital as per the application of the Company to the ECB, in line with the Company’s announcement for the financial results for the nine-month period ended 30 September 2018. A major part of the above-mentioned profit relates to the negative goodwill which has resulted from the acquisition of certain assets and liabilities of the ex-Cyprus Co-operative Bank. As such, the CET1 capital (transitional basis) increased to €726.1m on 30 September 2018, compared to €484.7m on 30 June 2018. The ECB also granted the bank permission to amend the calculation of the operational risk indicator for determining the own fund requirements to better reflect the increased operational risk of the combined entity. As a result, the total RWAs as at 30 September 2018 are increased by €110.4m to €4,930.6m, compared to the pro forma number of €4,820.2m.

Residences put to auction even with Estia

Borrowers who are approved for the Estia plan and fail to meet their obligations will be faced with the threat of foreclosures. According to Phileleftheros’ sources with knowledge of what was agreed between the banks and Finance Ministry, the foreclosure law will be activated automatically for those who do not pay their instalments three times in a row or within a specific deadline. Another issue that has emerged is the fact that if a borrower somehow finds the whole sum in order to pay-off their loan, the government will have to continue paying their 1/3 of the instalment, based on the agreement. As such, this means that the loan will remain open and a property could remain committed for up to 25 years, even if the borrower has found the money to pay back the whole amount. The paper reports, among other, that the process is currently underway to create the online platform that borrowers will use to submit applications for Estia. The Labour Ministry will be in charge of managing Estia, which is expected to be used by Bank of Cyprus, Hellenic, KEDIPES, Alpha Bank and AstroBank, which hold 90% of the banking market share.

Now see how vicious the vicious circle will become

Author Aristos Michaelides writes that whenever it is suggested that the only catalytic solution for the problem of NPLs is for the banks to start applying haircuts to loans or at least stop imposing abusive charges, there are those who say that this would not be fair on the banks’ shareholders and depositors. He says the response to that is self-explanatory: sooner or later the banks will have to sell these loans with a haircut to foreign firms anyway. He says the state of the banks today was anticipated and it is impossible for anyone to convince us that the state and all the financial stakeholders, experts, scholars and bankers did everything they could to rescue the banks, the economy and society. He says news emerged the other day that BoC sold a package of loans with a face value of €245m, and a net value of €33.7m; which means the bank wrote off 86% of the loans’ value and sold them to APS Delta, member of the Czech APS which participates in the platform that manages Hellenic’s NPLs. Yet it couldn’t have offered a smaller haircut to the borrowers and made it easier to restructure their loans? Michaelides adds that the real estate market will be completely controlled by the banks that will be foreclosing properties by the hundreds, and very soon the asset management funds will also start selling the mortgaged properties that pass to under their administration. As such, he argues, the real estate market is changing, entering a very curious as well as unpredictable era both for buyers and professionals of the sector.

Bank pressure on CSE

The CSE recorded significant losses on Thursday, receding to 61 units due to increased pressure on the shares of Bank of Cyprus mainly, the value of which dropped by over 5%. On the other hand, Hellenic’s share recorded losses of over 1%, despite the increased interest it generated, which exceeded €1m in value.

Divide and conquer

24H writes that Bank of Cyprus CEO John Patrick Hourican and his close associates have turned the bank into a personal kingdom with courtiers, favourites and subordinates. At a time when the bank is going from bad to worse, despite the pompous and resounding announcements claiming the opposite, its rescuers are making sure to look after their own welfare, ignoring the commitments and obligations they took on when they took over rescuing the bank. The paper also refers to the labour unrest between bank employees’ union ETYK and the banks over the renewal of their collective agreements, and the payment of increments and CoLA. It says BoC employs 3,700 people and Hellenic 2,500.

They want foreclosures cancelled

24H interviews the head of the borrowers’ protection association (SYPRODAT), Costas Melas, who among other explains that the declaratory judgement that was filed with Limassol District Court aims at preventing foreclosures from being followed through, if the debt being put forward by the bank was created due to abusive clauses in the loan contracts. He adds that Cyprus is the only EU state where its citizens are not protected based on the principles of EU law, and that it is mandatory for the European directives and the human rights charter of the Lisbon treaty to be implemented. Melas was also asked, among other, to comment on the non-credit institution licence that was issued to SEDIPES by the Central Bank. He said he hoped this development would put an end to the upheaval that has been going on for months now at the former Co-op and hassling thousands of borrowers with unfavourable consequences. He said the problems arose due to the fact that the former Co-op lost its licence immediately after its assets were moved to Hellenic, as it stopped managing NPLs which in turn left pending restructuring agreements up in air.

With new loans they are burdening future generations with debt!

Gnomi writes that while the government was selling fairy tales about a success story, buffers and surpluses, it all came crashing down and the surpluses turned into deficits overnight in 2018, in the range of €723m. Among other, the paper describes the early repayment to Hellenic by the Finance Ministry of a debt by the state to the former Co-op, worth €324m, as a ‘mega scandal’.

Property sales up in January

Sales deeds recorded a 10% increase in January, according to the Land Registry Department. In January 2019, 766 sales deeds were submitted, compared to 695 the previous month. All regions recorded an increase in sales, with the lowest rate recorded in Larnaca. The biggest number of sales deeds was submitted in Limassol (251) and Paphos (187). Nicosia (161), Larnaca (114) and Famagusta (53) follow. It’s worth noting that the number property purchases made by European citizens and third-country nationals saw an 8% drop in January 2019, compared to the same month last year, according to the latest data from the Department of Land Registry, with the drop attributed to a decrease in the number of properties bought by non-Europeans. In January 2019, a total of 107 real estate sales contracts were submitted by Europeans, while 250 sales documents were submitted by non-Europeans, for a total 357 in the month. This compares with a total of 387 sales contracts filed in January 2018, of which 90 were by Europeans and 297 by non-Europeans.

Helix 2 on the way from Bank of Cyprus

Before the details of the sale of Bank of Cyprus’ loan portfolio to Apollo have even been finalised, aka the bank’s project Helix, BoC has already begun preparing the ground for its second sale of a large NPL portfolio. This procedure will be called Helix 2 and Phileleftheros writes that it will be the bank’s most defining move yet in its effort to curb NPLs to below 10% of the total.

One in four households has no heating

Cyprus has one of Europe’s highest rates of citizens who did not have the ability to keep their home warm in 2017, at a percentage of 22.9%; three times the EU average of 7.8%.

Pilides: Cypriots dream of a ferry link with Greece

It would be no exaggeration to say that Cypriots are excited about the reoperation of a ferry link between Cyprus and Greece after 18 years, 24H reports. Over 11,000 signatures have been collected in an online petition, which has been translated into seven languages: Greek, English, Russian, French, Spanish, German and Italian. It is directed at the Mayors of Limassol and Piraeus, President Nicos Anastasiades and the President of the Ports Authority. Deputy Minister of Shipping Natasha Pilides told the site “business stories” that the government’s aim is to have the ferry link up and running by the next tourism season. “A preliminary study is taking place to explore all the scenarios and see what the financial cost will be, the cost of a ticket compared with an airline ticket, the connection with Piraeus port or other islands’ ports, the new jobs that will be created, the potential for attracting tourists to Cyprus as well as the ability to receive European funding,” she said. “At the same time, the possibility is being examined to connect Limassol port with Piraeus, with interim stops at an island or islands of Greece.”

Top Kinisis Travel invests in the cruise sector

Top Kinisis Travel Public Ltd has been investing heavily in the emerging cruise sector over the past decade, significantly increasing its sales in Greece and Cyprus for luxury cruises. It represents important cruise companies such as MSC Cruises, Princess Cruises, Royal Caribbean, Celebrity, Carnival, Ponant Silversea, Sea Dream.

SOS over occupied Famagusta’s port

Organised citizen groups in the occupied areas have called on the occupying regime to rescue the port of occupied Famagusta. They are asking for investments so that the port can continue with its strategically important role. Turkish Cypriot daily Kypris runs a front-page story reporting that the buildings at the port are close to collapsing, and no effort is being made to restore them, while it adds that the situation is causing upset and despair. The organisations said they were opposed to the port’s privatisation, and that it should be managed by the pseudo-state with the help of investors.

Casino construction goes to Greek bidder

According to Politis’ sources, the consortium, which will most likely be chosen to implement the construction of the integrated casino-resort City of Dreams Mediterranean, consists of Greek companies TERNA and J&P – AVAX. The newspaper reports that Integrated Casino Resorts Cyprus, comprising Melco Resorts & Entertainment (“Melco”) and Cyprus Phassouri, has already started negotiating with the consortium. If everything goes well, the “gold” agreement will be signed within the next few days. The other bidders, were a consortium consisting of French company Bouygues Construction Group and Cybarco and a third consortium under the Consolidated Contractors Company (CCC). However, it was reported that the consortium of TERNA and J&P – AVAX, is the company’s first choice for the construction of the casino. The article notes that TERNA has recently undertaken some of the construction projects of Ayia Napa Marina in Cyprus, while J&P -AVAX had participated in the construction project for the Limassol marina. It’s worth noting that J&P-AVAX will not be affected by the developments in J&P Overseas, and soon will even change its name keeping only AVAX. The article goes on to say, that when the casino-resort is completed, the temporary casino in Limassol will be transferred there. The construction will be closely monitored by the state, following the Parliament’s release of the funds for the appointment of a project supervisor and a team of advisors for the casino’s construction.

Project worth over half a billion euros

Politis reports that construction works for the casino-resort have already started, since the building’s foundations and other preparatory works have been completed. The construction of City of Dreams Mediterranean is expected to start within 2 months after the contract with the chosen bidder is signed, which as the newspaper has reported, is expected to be the consortium TERNA – J&P – AVAX. The target of Integrated Casino Resorts is to launch the integrated casino-resort in 2021. It is estimated that the project will generate 300.000 additional tourists, with the investment costing €550m. It is noted the CEO of City of Dreams Mediterranean and Cyprus Casinos, Craig Ballantyne, said that the cost of the investment will exceed initial calculations. City of Dreams Mediterranean will be, upon completion, the largest casino-resort in Europe. Its facilities will include a gaming space with 136 tables and 1200 slot machines, a five-star hotel with 500 rooms and luxury villas, 11 restaurants and cafes, a wellness centre, a sports centre, pools, commercial spaces, an external amphitheatre, and many green spaces. The casino-resort will also have a conference centre of 9.600 sq. m., since the consortium especially aims to attract Meetings, incentives, conferences and exhibitions (MICE) tourism. The consortium expects that the casino-resort’s impact on the Cypriot economy, after its second year of operations, will amount to €700m or 4% of the country’s GDP per year. It is expected that 4.000 people will be employed during the casino’s construction phase, while 2.500 permanent positions will be created upon its completion.

Construction for Paphos-Polis road starts

Construction for the road Paphos-Polis Chrysochous will begin in 2019, if everything proceeds as planned. The road will be a two-lane road. The Public Works department aims to get an approval from the Environmental Authority in February, in order to declare a competition for the construction works.

Lillikas accuses political leaders of undermining of GHS

Haravgi reports that the course of implementation of the GHS was the main point of discussion during yesterday’s meeting between Minister of Health, Constantinos Ioannou and Citizens Alliance leader Giorgos Lillikas. Ioannou pointed out for another time that the government is committed to implementing the GHS without changing its philosophy and structure, within the timeframe voted by the House of Representatives. Giorgos Lillikas noted that the effort to undermine the GHS is unacceptable and that it serves private interests. He pointed out that any doctor has the right to remain outside GHS but at the same time, they should inform citizens and patients correctly.

Public panic over flu, Ministry reassures people

The Minister of Health has said that influenza type A outbreak has caused panic among citizens. The public’s concern was intensified by the death of a seventh influenza victim, Stavros Georgiou, 34 years old, from Larnaca who died without having previous health issues. At the same time, 40 serious cases are hospitalised. Furthermore, there are no available vaccines in the private sector, while in the public healthcare sector, only 1000 vaccines have remained.

Responsibilities for Influenza type A death toll

Phileleftheros reports that people are to blame for the death toll due to influenza type A. A 34-year old man, died due to influenza type A increasing the death toll of said flu in Cyprus to seven. Among the victims there is 20-month old baby who died a week ago. The author argues that State Health services is the major responsible actor. The specific flu has become an epidemic over the last month. The author says that only in the last few days did the state hospitals realise that they must distinguish and treat Type A flu patients right away, According to Marios Matsakis, forensic expert, the state health services have not realised that this is an epidemic and citizens have not been properly informed regarding this type of flu and its risks.

Citizens panic over flu vaccines

Politis reports that due to influenza type A outbreak and the seven deaths citizens are panicked and are rushing to get vaccinated. The article reports that there are not enough vaccines in the private sector, while there is no stock in the state warehouses. There is shortage in some hospitals and high-risk persons have not yet been vaccinated. The Ministry of Health hopes that it will receive 5,000 additional vaccinations from the UK and Germany by next week. The chaotic situation that was recorded in the state hospitals in the previous days has obliged the Ministry of Health and the state health services organisation (Okypy) to draft an action plan in order to stop the virus from spreading.