Daily Press Review - 24/6/2019

Backstage developments at Hellenic

The Extraordinary General Meeting of Hellenic Bank’s shareholders this coming Wednesday, will for the first time bring together all the stakeholders comprising the bank’s new structure, which emerged from the recent share capital increase. After the share capital increase, which was ordered by the regulatory authorities for the completion of the acquisition of the business and liabilities of the former Co-op, some of the shareholders saw their stake being reduced (Third Point), others significantly increased their presence (Demetra Investment), while new players entered the picture (Pimco, 7Q). The extraordinary general meeting will determine the changes in the procedure of establishing the Board of Directors, and specifically the following: at every annual general meeting (which this year will be held on 24 July) all the members of the Board of Directors will be up for re-election. This is not the case today. This change is linked to the establishment of a new board of directors which will reflect the new shareholders structure. Politis sources report that developments are already underway in the backstage. Demetra Investment suggested four persons to the rest of the major shareholders (one of which is Mike Spanos who is a former member of the BoD of Bank of Cyprus). Persons who are aware of the developments, are avoiding to make any predictions on how and who will represent the major shareholders in the new composition. Hellenic’s BoD has 13 seats and the battle will be given for four out of the six seats of non-independent members, while the other two seats will be taken by the CEO and the CFO of the company. These will in theory be claimed by the five major shareholders: Demetra Investment Public Ltd (21%), Wargaming Group Ltd (20,61%), Poppy Sarl (Pimco) (17,30%), Third Point Hellenic Recovery Fund LP (12,59%), 7Q Financial Services Ltd (9,99%). The latter is working for ETYK, through the provident fund of the bank employees union (this was announced by Loizos Hadjicostis in the union’s latest conference). The numbers as well as the backstage climate, indicate that everyone can be represented since Third Point is in the process of disinvesting from Hellenic Bank. Politis also reports on the departure of Marinos Yiannopoulos from the BoD and his replacement by Kristofer Richard Kraus, which means that Pimco is now represented in the Board. The article also reports that NPLs were reduced by €19m in the end of February 2019, compared to the end of January 2019, with their NPL ratio (in relation to gross loans), recording a small increase.



Who will vote on behalf of Wargaming and Demetra Investment

Phileleftheros reports that Hellenic Bank has announced the names of the people who will exercise the voting rights of Demetra Investment and Wargaming. As Hellenic Bank reports, during the Extraordinary General Meeting of Hellenic Bank on 26 June, Nicos Michaelas and Varnavas Irinarchos will be exercising the voting rights of Demetra Investment. As it comes to Wargaming Group Limited, Evangelos Georgiou and Marianna Pantelidou Stylianou will be exercising the company’s voting rights. According to the announcement, after the end of the Extraordinary General Meeting, Mr. Evangelos Georgiou and Ms. Marianna Pantelidou Neofytou will cease to hold voting rights in relation to the above proxies.

 

The 15^th CFO Management Forum

The 15^th CFO Management Forum was held on Thursday 20 June 2019 at Hilton Park in Nicosia. The forum attracted around 200 CFOs and other senior members of large businesses and organisations, active in Cyprus as well as representatives and members from the public sector. EY Cyprus was for yet another year, the main sponsor of this event, which gives participants the opportunity to share their experiences, expand their knowledge and network as well as exchange opinions, discuss and search for practical solutions to the challenges of their profession. The Finance and Technology Award, was given to Andrew Tinney, Chief Financial Officer of Wargaming.

 

KEDIPES offers clarifications

The Cyprus Asset Management Company (KEDIPES) issued a press release today, giving its own side of the story for everything that was said during a House Committee meeting, which examined the procedures that were followed in the sale of the Co-op’s properties. KEDIPES stresses that Altamira, has been its servicer for loans with delays of more than 90 days and non-own use properties. At the same time, they stress that the agreement hasn’t changed until today but they underline that there was a significant amendment with regards to the perimeter of KEDIPES’ portfolio under management, since KEDIPES’ needs for own-use properties have been significantly reduced”. According to KEDIPES, “the management of assets through Altamira, follows a specific policy which covers the entire asset portfolio of both the current and new properties that are acquired in debt-to-asset swaps. They underline that all the decisions are available for control. In relation to the number of staff that departed from the Co-op and was re-hired by KEDIPES, they underline that “the agreements to implement a voluntary retirement scheme and the voluntary transfer of employees to Hellenic Bank, caused unprecedented challenges (especially in the first stage of KEDIPES’ operation) as well as obligations towards the unions, which KEDIPES had to honour”. As they note, the company employs a number of employees who departed through a voluntary retirement scheme on a temporary basis. These people were asked to stay due to their experience and expertise for a transitional period. In September last year, after the Co-op-Hellenic deal, 92 people were employed but today KEDIPES employs 26. At Hellenic Bank, 302 were employed but have now been reduced to 8. KEDIPES reports that “the evidence for each person is at the disposal of the Auditor-General in the framework of a relevant check”, adding that an expert firm is carrying out a study on the matters of structure, staffing and competence of KEDIPES. They will take decisions on the basis of this study. KEDIPES expresses its readiness to cooperate with the Auditor’s Office and provide all the information relating to politically exposed persons (PEPs).

 

Servicers responsible for €700m-debt restructurings

Kathimerini Economy reports that servicers in Cyprus have reduced NPLs in banks by €700m since the start of 2017. The first company to arrive in Cyprus was APS in January 2017, with its deal with Hellenic Bank. More banks followed with the same practice, due to the aggressive strategy imposed by the SSM. Some deals were more efficient while others less, always accounting for the time they had to operate effectively. As the Minister of Finance said on Friday, talking about KEDIPES, its servicer Altamira has generate a €195m-profits from the management of the loans and assets of the former Co-op since September 2018. Furthermore, the latest results of Hellenic Bank, indicate that the total debt restructuring schemes that APS has implemented since July 2017, amounted to €280m. As it comes to the Bank of Cyprus,(without accounting for the KPMG London team, which managed SME and consumer loans and had achieved a €1.1b reduction as of June 2017), the bank had two companies servicing its loans, Resolute and the Australian Pepper. Pepper had specifically arrived in order to manage a €800m-worth portfolio of SME and consumer loans. Since 2017, the two companies have proceeded with restructurings under debt-for-asset schemes, for loans worth about €200m. In total, the majority of servicers have removed €700m-worth of loans from the equation. The equation includes B2Kapital which purchased loans worth €144m from APS, and even though the deal was made recently (start of 2018), they have already started servicing loans. The article reports that while the momentum was high in the end of 2014 until the end of 2017, the steady reduction of NPLs stopped suddenly. The main reason was because all the major restructurings of borrowers (developers) with big loans were completed. At the same time, until the end of July 2018, the banks didn’t have effective tools for the reduction of NPLs, and as such they were unable to proceed to drastic solutions such as foreclosures, sales of loans etc. The article reports that in order to more drastically reduce NPLs, the banks proceeded to drastic measures, while the Co-op partial acquisition by Hellenic made the huge difference. To summarise, in four transactions, €10b worth of loans were removed from the banking sector. As it comes to the sale of NPL portfolios, the Bank of Cyprus has proceeded to three transactions (selling portfolios worth €22m to CDB Bank, €33.7m to APS, and €2.7b to Apollo Global Management) and Hellenic Bank has proceeded to one transaction (sale of a €144m portfolio to B2Kapital).

 

CNP “flirts” with Hellenic Bank

Kathimerini Economy reports that negotiations are ongoing behind the scenes between CNP Cyprus Insurance Holdings (subsidiary of the French insurance giant CNP Assurances) and Hellenic Bank. As the paper has learned, the €97.5m-investment, which freed CNP Cyprus from Bank of Cyprus has cleared the air and now the company seems to be aiming to make a deal with a bank and become their strategic insurance partner. Even though neither side has confirmed this, it is certain that both are open to partner up, in order to improve their performance. On the part of the French CNP, it is well-known that after investing in the Cypriot subsidiary, it wants to further its expansion in Cyprus. This expansion may take place in two ways: through its network of representatives or through a strategic partnership with another Cypriot bank. Experts from the insurance sector comment that what is certain is that CNP plans to cooperate with local banks and that approaching Hellenic Bank is very reasonable due to its size after the absorption of the Co-op. In the past, it has demonstrated that it seeks such a strategy. In 2016, it had approached the Co-op so as to become their strategic partner. However, complexities with the Bank of Cyprus as well as the large percentage it owned, ended any efforts for partnership between the Co-op and CNP. After an open competition Universal Life was chosen as the Co-op’s strategic partner. Asked to comment on the matter, Hellenic Bank said that they are examining all the possibilities, that will maximise the value of its insurance services and bank insurance. Kathimerini goes on to report that Hellenic Bank has three choices for the future of its insurance products. Firstly, it will either sell the two insurance companies to a third company or it will merge its two companies with a third insurance company. Another possibility is that it will invest in its subsidiaries, upgrading the offering and position of their products on the market. Thirdly, another choice would be to make no changes to its business model.



Estia beneficiaries between 45-55 years old

Phileleftheros Economy reports that the average Cypriot borrower who wasn’t able to cope with the financial crisis and is now eligible for Estia, is a private employee between 45-55 years old. The paper notes that this is the biggest group of eligible borrowers, while the 55-65 age group is the second most common profile. The current beneficiaries of Estia are expected to reach or exceed 14.700. The clients who will benefit from the government scheme, come from BoC, KEDIPES, Hellenic Bank, while a fewer number are clients of Alpha Bank and smaller banks.

 

How FinTech brought a Tier 1 bank to Cyprus

Phileleftheros reports on the acquisition of the Cypriot Fintech company Point Nine by the Japanese banking giant Mitsubishi. The author says that on the occasion of this acquisition they wanted to learn more about the company and its operations. This is why they contacted the co-founder of Point Nine – which has been renamed to MUFG Investor Services FinTech Limited – Pavlos Christoforou to explain the services offered by the specific Cypriot Fintech company and how they managed to achieve the deal with a Tier 1 banking giant, as well as what is next for the Cypriot company. The article reports that the company was founded in 2002 by Pavlos Christoforou and Ioannis Matsis (who is now the CEO of Hellenic Bank). They understood how important the internet and long-distance services would be in the future and tried to find a specific sector, which they thought wasn’t developed enough at that point and attempt to create a particular product.



KEDIPES press release

The Cyprus Asset Management Company (KEDIPES) issued a press release, following a House Committee meeting, which examined the procedures that were followed in the sale of the Co-op’s properties. KEDIPES stresses that Altamira, has been its servicer for loans with delays of more than 90 days and non-own use properties. At the same time, they stress that the agreement hasn’t changed until today but they underline that there was a significant amendment with regards to the perimeter of KEDIPES’ portfolio under management, since KEDIPES’ needs for own-use properties have been significantly reduced”. According to KEDIPES, “the management of assets through Altamira, follows a specific policy which covers the entire asset portfolio of both the current and new properties that are acquired in debt-to-asset swaps. They underline that all the decisions are available for control. In relation to the number of staff that departed from the Co-op and was re-hired by KEDIPES, they underline that “the agreements to implement a voluntary retirement scheme and the voluntary transfer of employees to Hellenic Bank, caused unprecedented challenges (especially in the first stage of KEDIPES’ operation) as well as obligations towards the unions, which KEDIPES had to honour”. As they note, the company employs a number of employees who departed through a voluntary retirement scheme on a temporary basis. These people were asked to stay due to their experience and expertise for a transitional period. In September last year, after the Co-op-Hellenic deal, 92 people were employed but today KEDIPES employs 26. At Hellenic Bank, 302 were employed but have now been reduced to 8. KEDIPES reports that “the evidence for each person is at the disposal of the Auditor-General in the framework of a relevant check”, adding that an expert firm is carrying out a study on the matters of structure, staffing and competence of KEDIPES. They will take decisions on the basis of this study. KEDIPES expresses its readiness to cooperate with the Auditor’s Office and provide all the information relating to politically exposed persons (PEPs).



Changes in the local and global environment and the potential for new services

Since the start of the 1990s, Cyprus has been established as one of the most attractive financial hubs of the wider region. In the past few years, there have been great changes in the financial, geopolitical and legal environment of Cyprus as well as other countries, with whom Cyprus is trading. Furthermore, the March 2013 events marked a dramatic change in the financial environment of Cyprus and affected the liquidity of Cypriot banks. The financial sector was stabilized with the 2013 consolidation, the subsequent recapitalisations, as well as the Co-op-Hellenic Bank deal, and the transfer of its good business (deposits, network of branches and personnel) to Hellenic Bank. Another positive development was the sale of an substantial NPLs portfolio to Bank of Cyprus. The banks are adequately capitalised, while the systemic banks of the country are directly regulated by the ECB. The author concludes by saying that we must continue to push for the transfer of physical headquarters to Cyprus (headquartering) as well as further promote Cyprus’ service sector to new markets, apart from the traditional markets (Russia and Europe), such as Asia, China, Africa, Middle East as well as the wider Arabic world.



Astrobank CEO: Mergers are inevitable

Politis interviews the chairman and CEO of Astrobank, Constantinos Loizides who reveals the ambitious development plan of the bank. The bank aims to achieve a full digital transition, turning its attention to the Greek market, speeding up the provision of new loans, entering the corporate bonds market, while they will also try to get the bank listed in the CSE. Commenting on the wider developments in the banking sector, he considers that it is inevitable that there will be more mergers while he also predicts that the NPL rates in the banks will significantly drop, due to the directives of the Central Bank.



Ministries to record fiscal risks

All the Ministries and Deputy Ministries were called to record all the fiscal risks they are facing, by the end of the month. After recording the risks, they will send all the information to the Ministry of Finance, which will in turn study them. The goal of the Ministry of Finance is to evaluate potential risks and prepare a special plan so as to avoid a fiscal diversion. The risks that the ministries are facing are mainly related to lawsuits submitted by public employees or third parties that make agreements with the public sector. The Ministry of Finance, send a circular to the Directors General of the rest of the ministries, asking them to record the lawsuits that have to do with public procurement procedures as well as the lawsuits made by public employees in special tables.





The winners of the Hellenic Masters Tennis Academy tournament

The island-wide tennis tournament, Hellenic Masters Tennis Academy, which was organised by the Academy with the same name in Strovolos closed on Sunday. The Grade 1 category tournament holds matches for 16 different age groups, Men/Women, Singles/Doubles. Tennis player, Constantinos Tembriotis was awarded with the ethos prize, for his behaviour during the eight-day tournament and specifically the composure he showed when he was challenged by an opponent. The article goes on to report on the winners of the tournament.



Premier club supports Cyprus Anticancer Society

The Premier Club of Bank of Cyprus organised a gala dinner on Friday, 31 May at the Annabelle hotel in Paphos. The evening was accompanied by the music of the popular singer Glykeria, who sang pro bono. During the event, the Premier Club donated €5.000 to the Cyprus anticancer society. The cheque was presented to the Director General of the Society, Maria Ioannidou by the Premier Banking Strategy director of the Bank of Cyprus, Stella Mouzouridou Damtsa.



24 KEDIPES employees receive salaries up to €8.000

KEDIPES employs 24 employees with gross salaries ranging from €5.000-8.000 per month, while the monthly payroll amounts to €778.019,11. According to the newspaper’s information, out of the 339 employees that the Cyprus Asset Management Company is employing, 1.18% of the employees (4 people), get a gross monthly salary with benefits of up to €1.000. 48.38% of the employees receive a monthly salary between €1.001 - €2.000 (164 people). This salary scale is the biggest among the employees. 29.50% of KEDIPES’ employees receive greater salaries, meaning between €2.001-3.000 (100 people). 13.86% of the KEDIPES’ employees receive a monthly salary between €3.001-4.000 (47 employees). There are also people who receive higher salaries. Sixteen employees receive a gross monthly salary between €4.001-5.000 (4.72% of all employees). Four employees receive a monthly salary between €5.001-6.000 (1.18%). Three employees receive a gross monthly salary between €6.001-7.000 (0.88%). There is also another employee with a salary between €7.001-8.000 (0.29%).



Constant supervision of Estia beneficiaries’ revenues

Phileleftheros reports that the Cabinet is expected to approve both the MoU as well as the Estia Scheme as a whole this week. A few amendments have been incorporated in the Estia Scheme, after approval by the EC’s DG Competition. Each beneficiary will have to go through very severe checks, while according to the MoU, any violation of the terms, will signal the beginning of a foreclosure procedure. According to the memorandum, the only necessary requirement for introduction to the scheme is that the applicant has given its clear consent to the state body, to access any information it has already submitted to the banks. According to the memorandum, the state body can re-examine the income criteria and assets of all the beneficiaries of the scheme, in order to understand whether there has been an increase or change in their assets in excess of 30%. The state body maintains the right to carry out checks in order to confirm that they satisfy the requirements for participation in the scheme. They can also appoint independent external consultants, who after proceeding to all the audit procedures including random checks, will submit a relevant report to the state body.



Properties worth €125m to be foreclosed in only a month

€125m-worth of properties will be foreclosed by the end of July, while new ones are added to the list every day. The list includes more than 130 properties, most of which are worth less than the Estia threshold (€350K). The banks and the credit recovery companies are making a huge effort to get rid of mortgages.



Complaints about DP World in probe report

Phileleftheros reports that the report of a probe included a chapter which detailed all the direct and indirect frustration that all stakeholders (users, Cyprus Ports Authority, Ministry of Transport, Communications and Works) have with DP World Limassol’s operation of the port. The Cabinet appointed a probe committee, following the complaints of the Director General of the Ministry of Transport against the board of directors of the Cyprus Ports Authority (CPA). Even though the report has to do with the complaints against the Ports Authority, it included a special chapter concerning witness accounts, who complained about the operation of DP World. In contrast, all stakeholders expressed satisfaction with Eurogate, the operator of the other terminal. According to the report, DP World instigated the conflict between the Ministry of Transport and the Board of the Ports Authority, because of the operational problems it has caused at the port. The president of the Ports Authority and a former member of the Board have said that DP World is not sufficiently effective. On the other hand, the report continues, Chrystalla Solomou head of the Ministry of Transport team responsible for concession contracts with operators, said in her testimony that “there are a lot of complaints by the users for their very high prices”. At the same time she said that “DP World creates some delays, and simply offers what it can offer, not making an effort to improve its service. The chapter’s conclusion was indicative: “during the visit of the investigative committee on 11.4.2019, at the Limassol Port, we realised that only one ship was being serviced by DP World”.



7% salary increase for port workers by 2020

The collective agreement for port workers foresees a total 7% salary increase and additional benefits, following a 18-month negotiation between two foreign port investors, the Cyprus ports authority, and associations SEK and PEO. This is the first collective agreement that is being renewed by the two foreign investors, DP World Limassol and Eurogate Container Terminal Limassol, who are the port’s operators following an agreement with the state in April 2016. The agreement which had expired on 31 December 2017, lasts for three years and will expire on 31 December 2020. This agreement ensures the employees’ jobs for three years as well as the conditions for their employment (salary increase, benefits, working hours and public holidays).



Big problems with the ports

The correspondence between Cyprus Shipping Authority (CSA) and the President of the Republic is rather revealing as it includes the plans as well as problems that were recorded in the privatisation procedure of the Larnaca port as well as operation of the Limassol port by private companies and about the delays in building a new terminal in Vasiliko. Phileleftheros reveals a new document which reports everything that was said in the meeting with the PoR, Ministry of Transport and the President of the CPA.



Invest Cyprus mission in Southeast Asia

Seeking to attract new markets, which can bring foreign investments to our country, the Cyprus Investment Promotion Agency (Invest Cyprus) held a large-scale campaign in Southeast Asia under the title, Cyprus: the European gate for global investments, from 17-21 June. In the framework of the campaign, a series of events were held aiming to promote Cyprus as an attractive investment destination as well as a business center in three different destinations of Southeast Asia: Vietnam, Singapore, Thailand. A large number of entrepreneurs and senior executives expressed interest in specific investment opportunities and choosing Cyprus as a business center. During these events, Cyprus emerged as a modern investment destination, with a high quality of life, making Cyprus an ideal hub for corporate headquarters (both for the employees and their families). The article goes on to say that Andy Choi, the Chairman of Melco Resorts & Entertainment, who has taken up the implementation of the casinoresort, τhe biggest investment project of our country gave his own account of his experience in Cyprus.



Ayia Napa municipality has decided to shut access to caves

Access to one of the most-photographed Cyprus landscapes is going to be shut soon. The Ayia Napa municipality has announced its intention to deny access to a favourite spot for thousands of visitors and create a viewing point for the visitors.

 

Golf courses require a lot of water

Four golf courses are in operation in Paphos, said the Minister of Agriculture, Costas Kadis. Their total irrigation needs are estimated to be around 1.6 million cubic metres. In 2018, the golf courses extracted 412 thousand cubic metres of water through the Government Water Project in Paphos. Moreover, the owners of the golf courses have extracted 511 thousand cubic metres of water from the groundwater reserves.

 

Progress of Ayia Napa marina works steady

Simerini reports that works for the completion of the emblematic Ayia Napa marina project are proceeding with a steady pace. It is a project that promotes development and highlights the dynamic of Cypriot entrepreneurship, and upon its completion will contribute to highlight the high tourist profile of Cyprus. The article reports that the first phase of the project which has to do with infrastructure and berthing works, is very close to being completed. It goes on to detail how the works are proceeding.



Subsidies and incentives

Phileleftheros reports that the Transport Minister, Vasiliki Anastasiadou stressed that the government is bound by the law and cannot intervene and affect the freight prices, so that they become more favourable for the consumers. At the same time, the Minister of Transport reported that, in cooperation with HERMES, they offer incentive schemes for airline companies so that they fly to Cyprus. These schemes are continuously renewed. The author argues that free market competition should have been benefiting the consumers.



Luxury and natural beauty by Citrine Estates

Citrine Estates, the new luxury project in Limassol will be the jewel of the Akrotiri gulf in the next few years. It is a contemporary residential and commercial project, which is located in close proximity to the casino-resort City of Dreams Mediterranean. In an interview with the vice-president of Citrine Estates, Elias Pattiches, he reported that the first phase of the project, which concerns the residential development, will be completed in 2021. The project will include 29 modern luxury apartments, 13 houses and 10 villas.



CNP insurance products complement GHS

Haravgi reports that, the CEO of CNP Cyprus Takis Phedias, expressed support in the attempts of implementing an efficient and sustainable GHS, highlighting that Cyprus is one of the very few countries of Europe without a public healthcare scheme. After a meeting with the Finance Minister, Haris Georgiades, he stated that following the recent investments in CNP, they will support GHS and said that they are creating insurance products that will complement the services provided through GHS.



GHS implementation causes reduction in medicine purchases from occupied areas

The decrease in the purchase of medicines from the occupied areas is now clear, following the implementation of the GHS’ first phase. According to a report by CyBC, between 1 June (the day the GHS was implemented) and now, there has been a recorded 70-75% decrease in the sale of pharmaceuticals in the occupied areas. Specifically, in June 2018, 212 purchases were recorded in the occupied areas, while in the first 20 days of June 2019, there are only 52. It is expected that as people become more familiar with the GHS and as more pharmaceuticals are incorporated in the GHS lists, sales from the occupied areas will decrease even further.



Exams for employment of 60 hospital workers

Today, OKYPY will hold written exams in order to fill 60 available vacancies for hospital workers.  The candidates will be informed through email or phone calls. The exam will last for 90 minutes, and is based on a psychometric sample, which includes questions examining awareness, analytical and composite thinking, numerical and linguistic skills, etc.



Funding for “FlexiQuit” programme

Alithia reports that, FlexiQuit, a programme which assists young individuals to quit smoking, has received significant funding in order to expand. The funding amounting to $275,000 was received by the National Cancer Institute in the USA but it was secured by ACThealthy, a Clinical and Healthy Psychology lab in Cyprus. FlexiQuit seeks to assist young individuals in their attempt to quit smoking but through an innovative and creative way; through the internet. At first, this programme was tested on teenagers and young adults with very encouraging results. Specifically, these individuals did not display an initial interest to quit smoking, but by the end of the 6 online meetings, 52% of them had quit smoking (compared to the 14% of the control group).



Serious illness

It is clear to everyone by now, that smoking kills. This “silent killer” is responsible for over 6 million deaths annually, and this number is expected to triple by 2030. It causes lung cancer, esophageal cancer, laryngeal cancer, it destroys the normal operation of the heart and the lungs, it can even cause blindness and so much more. All of these, have led the global scientific community, through the WHO, to define smoking as a serious illness, rather than just an addiction (which had been the case up until now).