Daily Press Review - 3/6/2019

Giannopoulos resigns from Hellenic Bank’s board

Marinos Giannopoulos, the vice-president and member of Hellenic Bank’s board of directors, tendered his resignation. According to the Bank’s announcement, Mr.Giannopoulos resigned due to personal reasons and his resignation will be effective immediately, on 30 May 2019. This development is taking place at a time when new shareholders have requested an extraordinary general meeting to put forward a resolution for changes to the Bank’s statute concerning the board of directors. A significant change is that all members of the board, executive or non-executive, tender their resignations if they want a re-election. This will contribute to the withdrawal of existing members, who without this change they would not withdraw from the bank. Until today, the bank’s statute foresaw the resignation of 1/3 member of the board of directors. Only Wargaming and Third Point of the existing 5 shareholders have representatives on the board of directors.

 

CBC issues new warning for financial stability

The high level of non-performing loans (NPLs), the weak profitability of credit institutions and the excessive private non-financial sector debt continue to pose the main sources of risks for the financial stability in Cyprus, according to the Financial Stability Report 2018 released by the Central Bank of Cyprus (CBC). CBC considers these risks to make the economy vulnerable, despite the fact that GDP recorded growth for the 4^th consecutive time. “Despite the positive course of financial activities and the continuation of robust economic growth, factors such as high public and private debt, paired with the banking sector’s challenges continue to make the economy vulnerable”, said CBC. CBC noted that the transfer of assets from the COOP to Hellenic Bank resulted in the decrease of the total loans by the credit institution to the private sector, and in turn resulted in the further contraction of the banking sector.

 

New bill for money laundering

A new bill was introduced in order to prevent money laundering and fight the legalisation of income from illegal activities. According to this bill cash transactions of €10.000, widening the range of goods involved in the transactions, is no longer allowed. It was noted that AKEL’s recommendation for setting the limit to €5.000 was rejected, as AKEL’s congressman Aristos Damianou stated that the shadow economy undeniably uses cash, and that the majority of other EU Member-States have a lower limit. DISY’s Averof Neophytou noted that lowering the limit would burden medium-sized enterprises.

 

 

Closer to 1%

The regression of the Cypriot 10-year bond to 1,14% brings Cypriot debt to a historically low level. International trading tensions bring investors right in the heart of the Eurozone, where the development’s stability and the low inflation, offer a safe haven. The Cypriot 10-year is close to 1%, while it is noted that it is similar to the bonds of Spain (0,72%) and Portugal (0,81%).

 

Insurance companies face many threats

Phileleftheros reports that the insurance industry in Cyprus is facing probably the toughest challenges of the last couple of decades probably even harder than the financial crises of 2013. That is why today, insurance companies, they must not only know how to manage a difficult financial situation but they also have to face many other important issues at the same time, and if they can’t manage to stay above water, their future will be in danger. It is obvious by now that in a small market such as that of Cyprus, it is impossible for 30 insurance companies to co-exist. Similar was the statement made by Ioannis Matsis, Hellenic Bank CEO, that in Greece which is a greatly larger country, both financially and population-wise, there are only 50 insurance companies in operation. As the insurance industry keeps changing, it is time Cyprus follows as well.



Hope for Children & Hellenic Bank

Hope for Children CRC Policy Centre has completed its 2^nd consecutive year of cooperation with Hellenic Bank, aiming to raising awareness of local communities for dealing with violence and bullying at schools. Specifically, the Hope for Children’s programme “Peer support groups” which was completed in May 2019, was expanded to more schools, thanks to Hellenic Bank’s funding. The need to educate children with the necessary knowledge and skills on how to deal with various hardships, is a result of the increased incidents of school bullying.



Pressure from the big guys

Beyond the usual discussion of the NPLs, the Cypriot banking system is entering a period of changes, that will determine the industry’s future. Digitization are a bet, when the large banks are preparing for big changes which will influence business relationships. Digital metamorphosis is the biggest bet, with new products and services being launched every week. That which is clear from the existing information, is that the market is being dominated by the two biggest banks. When it comes to the loan market BoC has 54% and Hellenic Bank has another 17%, thus leaving 1/3 “space” for the smaller banks. This concentration shows a clear 1st and 2nd place of the market, leaving the other 5 banks competing for the remaining 29%. After the COOP absorption, Hellenic Bank holds 30% of the household markets, while BoC has the leading 50%, and smaller banks cover the remaining 20%.

 

We have to move forward

An interview with Polyxeni Pazarou who despite her health issues, she does not quit. She creates, is inspired and moves forward, following her dream and presents her creations in Must fashion, with the aid of Hellenic Bank. Following Hellenic Bank’s recent “you got the power” campaign, a friend submitted Polyxeni’s story and that is how Hellenic Bank learnt Polyxeni’s story. Hellenic Bank, through the Must Fashion Anniversary Event, gave Polyxeni the opportunity to live her dream which at first seemed impossible. Thus, they asked Polyxeni if she would like to participate in the show by contributing 9 dresses to 9 graduating girls with the support of Hope for Children and her response was immediate and positive. Hellenic Bank’s goal is that these girls receive the dresses of their dreams for their graduations from Polyxeni. They will present the dresses in a unique and impressive show during the Must Fashion the Anniversary Event on Monday 10 June 2019.

 

The Fitch Ratings upgraded Eurobank’s credit rating

Phileleftheros reports that Fitch Ratings upgraded Eurobank’s credit rating from CCC to CCC+ and affirmed National Bank of Greece’s (NBG), Alpha Bank’s, Piraeus Bank’s systemic banks' ratings. Fitch stated that Eurobank’s upgrade followed their fast decrease in non-performing loans (NPLs) which means they have the lowest level of NPLs compared to the whole sum of loans from the other Greek banks.

 

JP Morgan on its way to Cyprus

Kathimerini reports that actions that have been taken in order for international banks to consider Cyprus’ banking system clean and to stimulate their interest on the island appear to have brought results. The banks that operate as correspondent banks for dollar transactions, is expected to increase from 2 to 3. JPMorgan Chase & Co is one of the oldest credit institutions of the United States, and they are interested in Cyprus. The process for JPMorgan’s decent in Cyprus is at an advanced stage. This development is the result of continuous efforts to promote the banking industry of Cyprus.

 

Pre-crisis loans

Funding for household loans in the Eurozone recorded the biggest increase in April since the last decade, while credit growth for businesses also continued at high rates. This information contains concerns that banks are getting ready to decrease funding due to the economic downturn. Loan funding for businesses increased by 3,9% in April following a 3,6% increase in March. Loan funding for households increased by 3,4%, at already higher rates since the beginning of 2009 and following a 3,3% increase in March.

 

BoC’s legal services are the best of Cyprus

BoC’s legal services are included in the catalogue “Legal 500 General Counsel Powerlist of Cyprus and Greece for 2019”. Legal 500 publications are a reference point for the legal world and anyone searching for legal counsellors. The choice of this Legal Service team was based on strict criteria and through a specific procedure and is therefore considered very significant.

 

Alpha Bank plans the sales of loans worth €4,7b

Alpha Bank recorded post-tax profit of €17,5m instead of €65,4m in the 1st quarter of 2018. The final result is influenced by the decreased earnings of interest, reaching €388,4m, and also the decrease of income from supplies which reached €70,2m. Vasilios Psaltis the Chief Executive Officer of Alpha Bank noted in his statement that “Alpha Bank has managed a profitable performance in the 1st quarter of 2019 despite the challenges in managing the loan portfolio of the continuous deleveraging of the NPLs”.

 

Cyprus is really low on family benefits

Cyprus’ expenditure on family benefits was €244,28m in 2016, which translates into €286,7 per resident. According to Eurostat, this amount is much lower than the European average of €690 per resident. According to their data, 28 EU Member-States spent over €350b for family benefits in 2016. This represents 9% of the whole expenditure for social protection benefits. Cyprus was once again lower than the EU average, with expenditure representing 1,3% of the GDP and 7% of the whole expenditure for social protection benefits.

 

EU €850m funding to strengthen 2000 businesses

Cyprus has ensured the 1st place among 28 EU Member-States for absorbing funding for 2018, despite the delays in their implementation. For the period of 2014-2020 Cyprus has funding reaching €850m, while for the next period 2021-2027 the financial strengthening is expected to be increased and to reach €870m. This money will be used in projects to improve the competitiveness of businesses, projects for environmental protection and energy conservation, actions to reinforce research and innovation, to promote working and education, but also work for social integration.

 

Ashiotis: Hellenic Bank became twice as big

With the acquisition of the good part of the Co-op by Hellenic Bank, a new large organisation was created with a leading position in the market. The bank increased its number of branches, personnel, portfolio, volume of deposits, capital as well as liquidity, Andreas Ashiotis who is chief economist at Hellenic Bank said. Speaking at the first Annual Gala Dinner organised by the lender’s Business Division, he underlined that the balance sheet of the Bank increased from €6.7b to €16b, and as a result Hellenic Bank became 2 times bigger. At the same time, he made his own predictions about profits from natural gas, as well as when these will be available. He said that 2018 was a landmark year fro Hellenic Bank as well as the broader credit system of Cyprus, reporting that the acquisition of the good part of the Co-op by Hellenic Bank contributed to consolidating the banking sector and ensuring financial stability, thereby contributing to upgrading the Cypriot economy to investment grade status. “We are fully aware of our role and responsibility toward the productive sectors of the economy and we stand by them, supporting their plans and contributing to the country’s growth, which is closely linked with the growth of these sectors”, he added.

 

Green light for Estia within the next two weeks

Phileleftheros reports that ESTIA will be green lit within the next few weeks at the latest. The legal-technical check of the agreement which will be signed by credit institutions, banks and license credit companies and the government, activating the government scheme that will help in paying off NPLs collateralised with primary residences. As CNA learns, the Legal Service has completed the legal check of the agreement and sent it to the Ministry of Finance. The Minister of Finance, Harris Georgiades will submit the agreement along with the Scheme (which was somewhat amended by the EU’s DG Competition) at the next Cabinet meeting or the one after it. It should be reminded that DG Comp approved the scheme at the end of 2018. Subsequently the participating bodies will sign an agreement with the competent government body, marking the scheme’s implementation. The agreement essentially is a memorandum of understanding that will govern the whole procedure and conditions for the submission of the annual instalments by the state. It should be noted that the State will submit 1/3 of the instalments throughout the reviewed repayment programme on the condition that the borrower will be paying back the remaining 2/3. The state will submit the sums at the end of the year, under the condition that the participating institutions confirm that the borrower has submitted their instalments. It is expected that Estia will help pay back the NPLs (as of September 2017) that are collateralised with primary residences. Based on initial calculations, the net value of the selected loans amounts to €3.4b, with the total cost for the state (for 25 years) amounting to €815m or 4% of the country’s GDP per year. According to the newspaper’s sources, Bank of Cyprus, Hellenic Bank, Astrobank, Alpha Bank and KEDIPES will all participate in the Scheme.

 

Applications for Estia to begin by end of month

Haravgi reports that the Estia Scheme will be open to applications by the end of the month, as the legal technical check of the MoU has been completed. The MoU is expected to be signed within the next few days by the Ministry of Labour and the banks that will participate in the Scheme. The scheme was approved from 3 December 20158 by the Commission but it remained pending for 6 months. It is still unclear what will happen with the borrowers that will be found “not viable for debt restructuring” and how they will handle borrowers who are marginally not eligible for the Scheme. The article reports that Bank of Cyprus estimates that they have loans worth €900m in their portfolio that are eligible for the Scheme. Hellenic Bank estimates that they have €250m-worth of loans that are eligible for Estia. In fact, the latter has set up a call centre (22690434) and an email cy-estia@apsholding.com while they also created an address for written communication at APS Debt Servicing Cyprus Ltd, 20 Amphipoleos, 2025 Nicosia, Cyprus. KEDIPES has €1b-worth of loans that are eligible for the scheme. According to the newspaper’s sources, Astrobank and Alpha Bank will also be integrated in the scheme, while it is not ruled out that other smaller banks will also participate.

 

“You have the power”

Alithia interviews Sophia Popper, head of the product marketing unit of Hellenic Bank, who explained the bank’s “you have the power” campaign. The interview comes after the Bank launched its campaign with a video entitled “Giorgos’ story”. In this first story, “Christos believed, he nominated and we supported him”, Hellenic Bank mentions. Giorgos was a very active man, however when he had his first big stroke in 1987 and two more strokes in 1992, he suffered thrombosis in both his legs and as such, he is faces mobility problems for more than 20 years, while he has been living in a wheelchair for the last 5 years. However, even if his legs are still weak to lift him up, the power of his soul, his friend Christos’ faith and the support of Hellenic Bank, will be able to lift him up.

 

Complaint about the banking sector

Dr Nicos Danos expresses writes to Phileleftheros, complaining about the banking sector.  “Yesterday, 31 May 2019, I received a phone call from a Hellenic Bank employee was asked me if I was Mr Danos and for my ID”. He goes on to say that the employee informed him that he owes €9 for his loan instalments, calling him to immediately pay back the sum. “Initially” he says, “I thought I didn’t hear well and asked again and she repeated that I owe €9, saying that in fact it is the second time that they are letting me know”. Then he says that he started yelling at the employee but upon apologising for his behaviour, he asked to speak to the branch manager in order to give him a piece of his mind.  However, the employee said that she couldn’t have him on the phone.

 

Central Bank: Great prospects as well as risks from transition to digital era

The transition of banks to the digital era creates huge prospects as well as significant risks, Central Bank stresses in its financial stability report. As it mentions, modernising credit institutions and transitioning to the digital era could have a positive impact for the credit system’s stability. However, they suggest caution, as the conditions for other risks are created (e.g. dependence on services provided by third parties or potential loss of data copywrite or violation of personal data and interruption of operations due to malicious cyberattacks. These incidents, they add, could result in a huge financial burden for both the banks and their clients. The Central Bank calls on credit institutions to implement policies that identify and mitigate such risks as well as alternative ways to resume their operations in the case where they lose the ability to use the technological innovations that they adopted.

 

Reuters Poll: Low interest rates until end of 2020

The European Central Bank has no prospect of raising interest rates through to the end of 2020, according to economists in a Reuters poll who said its next policy move will be to tweak its forward guidance towards more accommodation. But the May 24-30 survey of more than 100 economists also showed almost no change to euro zone growth and inflation forecasts, nor any change to the probability of recession, despite clear evidence that the bloc’s economy is under pressure. ECB officials have already raised the prospect of further support and said the central bank is willing to keep negative interest rates for longer if necessary, coming alongside a global shift by policymakers towards easing.



Cyprus to enhance cruise tourism

As of this moment, tourist arrivals via cruises in Cyprus are minimal (1,55%) compared to the number of tourists arrivals, but there is a great long-term opportunity to enhance cruise tourism in Cyprus. Establishing Cyprus as a cruise centre in East Mediterranean is the main goal of the Deputy Ministry of Tourism. The interest by international companies to include Cyprus in their routes, specifically the Limassol port, is very significant. Celestyal Cruise and TUI seem to have chosen to connect Cyprus with Egypt and Israel once again. According to information through DP World, the operating company of the Limassol port, the interest in Cyprus is not limited to Celestyal and TUI; for instance, Fred Olsen Cruise Lines has included Limassol in their new routes for the cruise period October 2019 – March 2021. Thus, the Deputy Ministry of Tourism expects that cruise tourism arrivals will increase in 2019, given that that there will be more cruise ship arrivals in Limassol this year. DP World’s data shows that in 2018 there were 68 arrivals in total, 36 were transit calls and 32 were home port calls. In 2019, that number increases and it is expected that there will be about 93 cruise ship arrivals, with 53 being transit calls and 40 home port calls.

 

60% of properties rented by the state do not have a valid contract

The state rents real estate of which 60% do not have a valid contract while in most cases the contracts cannot even be renewed due to the lack of final approvals and necessary certifications required by law. Indeed, this is a pressing issue for the Cyprus Supreme Audit Institution, who examines 602 contracts worth €25m every year, and are expected to present a report on the matter by the end of the month. The state’s budget to rent office accommodation requires the written consent of the Finance Committee. This practice has been implemented by the Parliament for the last few years, so as to have an inventory of all the real estate rented by the state. It should be noted that out of the 502 properties which are being rented by the state, 296 (59%) of them do not have a valid contract. As previously reported, they cannot be renewed due to not having the right authorisations, and in many cases the owners ask for rent increases. In about 50 cases the state is an “established tenant” which means the real estate was rented prior to 1983, when the legislation was different, and in another 15 cases the real estate is Turkish-Cypriot-owned. Moreover, data shows that the state gave property to the Limassol port investors in the framework of their trading activities, but then rented them for state operations. For instance, the state pays rent to DP World Limassol for the office of the Veterinary Centre Limassol, and  additional rent for a warehouse used by the Customs & Excise Department. The state pays rent to Eurogate for a warehouse that is being used by the Customs & Excise Department.

 

The big cruise groups caution Greece

During the 5^th Posidonia Sea Tourism Forum, large international cruise companies raised the need for developing new destinations, managing existing cruises and dealing with the issue of excessive tourism in popular destinations such as Santorini or Mykonos. They also warned about the instability that is uninterruptedly observed in the area, especially related to Turkey. Cruise companies executives made general claims that there will be a steady increase in cruise tourism arrivals, but the question remains; how much does it really impact Greek economy, either positively or negatively.



Significant awards for Melco’s Morpheus

Morpehus hotel by Melco Resorts & Entertainment Limited in Macau was the winner of Best Hotel Architecture Macau and Best New Hotel Construction & Design Macau at the Asia Pacific Property Awards 2019. Morpheus is part of Melco’s flagship integrated resort, City of Dreams Macau. The 1.1 billion dollars hotel project is the world’s first free-form exoskeleton high-rise designed by the late Dame Zaha Hadid. A renowned global mark of excellence, the Asia Pacific Property Awards 2019 celebrates the highest levels of achievement by companies operating in all sectors of the property and real estate industry. Participants are judged by a highly experienced team of professionals comprising experts and experienced members within property-related specialties, including hospitality. The achievement follows Morpheus being hailed as one of the World’s Greatest Places 2018 last year by TIME Magazine, just two months after its opening, and more recently being named Building of the Year 2019 by ArchDaily, the world’s most visited architecture website.

 

High-rise buildings have a positive impact on the economy

Interview with the Chairman of Invest Cyprus, Michalis Michael who suggests that the product offered to foreign investors should be constantly enhanced. He also argues that the alternative sectors of the economy should be explored more, as they have substantial prospects for growth. He also underlines that the Cyprus Investment Programme had a decisive role in the recovery of the Cypriot economy; however, it is unclear whether this is the only reason the economy’s return to growth. As it comes to the reforms that the state should focus on, Michael underlines the state’s digital transformation, improving the government’s response time and challenging bureaucracy, which creates a series of problems and delays. He mentions that in the last few years, significant projects in different sectors were implemented, with the contribution of foreign capital. This is a vote of confidence for the Cypriot economy and its growth prospects he argues. He goes on to say that “it would be an omission on my side if I don’t specifically refer to the casino-resort, which is a €600m investment, which is expected to bring important and multi-dimensional benefits to the Cypriot economy”.

 

The truth about the 29 high-rise buildings

Politis reveals the real picture on high-rise buildings. According to the paper’s study, 16 high-rise buildings (10-39 storeys high) are currently being constructed. Another 6 were licensed, while for 7 buildings, their permits are still pending. The highest buildings are being licensed at the Limassol beach front, while towards the west side and the east side, buildings are lower. In reality, the “towers” are being constructed everywhere on the entire beach front, compared with other cities where a specific are is chosen for high-rise buildings where businesspeople enjoy benefits as well as obligations. In Limassol, four multi-storey developments are being constructed at the moment, at the border of the Municipality of Limassol. This is the 37- storey Limassol One by Paphilia, the Trilogy Seafront Towers (39,37,16 storeys-high) by Lanitis Holdings and the 16-storey The Cedar Oasis Tower by Kip Consulting. On the west side of Limassol, construction has begun for Melco’s casino-resort, which will include a 16-storey hotel. Another 5 similar developments have secured a town-planning permit but construction hasn’t begun yet.



Internet therapies pose a serious threat for drug abuse and side effects

Using advanced machine-learning techniques, Georgia Tech researchers have examined nearly 1.5 million Reddit posts to identify risks associated with several of the most common alternative - and unproven - "treatments" for opioid addiction. These clinically untested, self-directed treatments are often created and promoted through online communities like Reddit, where their use is encouraged without professional medical consultation. According to the study, the top three most commonly used are; Kratom - an unregulated herbal stimulant, Imodium - a common anti-diarrheal medication, Xanax - a psychiatric medication used to treat anxiety and panic disorders. The findings - part of what the researchers say is one of the first large-scale social media study of clinically unproven, alternative treatments (ATs) used in opioid addiction recovery - indicate that these treatments offer; risky results, potentially substantial side effects, high chance of abuse for those struggling with recovery.

 

Today is the GHS’ big test

Today, the 3^rd day of the GHS’ implementation, is especially important as it is the 1^st  working day and demand of services is expected to be significantly higher, compared to the weekend. Yesterday, a small number of visits to doctors were recorded, and even some prescriptions were fulfilled by private pharmacies. No serious issues were raised, however, HIO’s call centre responded immediately to any calls received by GHS beneficiaries. On Saturday, they recorded over 300 calls from doctors and pharmacists. In total on Saturday, there were 735 visits to doctors, 197 simple prescriptions were provided and 231 repeated prescriptions, while 172 were executed by pharmacies. About 120 referrals were issued for tests and exams.

 

A bill for palliative care in the works

The Ministry of Health (MoH) is drafting a new bill for palliative care. It is noted that under the current legislation, palliative care will be offered within the GHS in the second phase of implementation, beginning 1^st June 2020. According to current legislation, palliative care means providing health services to beneficiaries with progressive diseases, such as pain management and treating symptoms, in order to improve the quality of life through the continuous supply of general health services until the patient dies.

 

500 additional pharmaceuticals in the GHS over the next few weeks

Politis reports that there were a lot of complaints from both health professionals and citizens – mostly shared on their social media pages – about well-known pharmaceuticals that has not yet been included in the GHS. For instance, Bisoprolox, which works to treat hypertension or heart failure. Ezetrol, which is used to treat cholesterol, is also absent from the GHS pharmaceutical list and none of its substitutes are in the list either, meaning that the medicinal substance ezetimibe is missing entirely from the list. Indeed, over the next few weeks, 500 additional medicines will be included in the list, increasing the toal number to 1580.

 

Intervention for public health in Troodos

The public health system of Troodos is lacking and transitioning in the GHS framework is proving rather difficult. The image presented today is depressing; the downgrading of Kyperounta hospital, degradation of rural health centres and disregard for community clinics. The problems that are more prevalent include; problematic opening hours and “on-call” system, problematic operation of ambulances with volunteer drivers, infrastructure, equipment, staff and satisfactory accessibility. The implementation of the GHS has to consider the fact that it is a mountain area, the high percentage of elderly residents, as well as the seasonal increase of population. They are trying to improve the quality of health services through modernisation of equipment and ambulances in order to decrease response times.