Daily Press Review - 6/8/2019

Wine villages protest bank branch closure

Hellenic Bank’s decision to shut down their branch in Pachna village, in the Limassol region, has brought negative reactions. Yesterday, the affected residents of the wider area, with the support of Limassol’s MPs, party representatives and local authorities, held a protest aiming to reverse the decision, since there is no other bank in the region.



“Haircut” of deposit interest rates

Phileleftheros reports that big depositors will be paying the bank in order to be able to deposit their money. For the first time ever, the Banks have imposed a negative interest rate for their bigger clients. Hellenic  Bank has notified its customers, who have multi-million-euro deposits at the bank, informing them that their interest rate will turn to negative. As it comes to Hellenic Bank, this policy will mainly apply for semi-governmental organisations and large Provident Funds but it does not apply for household and SME deposits. The negative rate was set at 0.4%, as this is the percentage the banks are charged by the ECB to deposit their liquidity. More banks are due to follow this policy. At the moment they give zero interest rates, while it’s matter of time that they apply negative interest rates. The new interest rate policy is linked to the excessive liquidity of the banks. Indicatively, based on the results of the banks for the first trimester, Hellenic Bank maintains cash and deposits in Central Banks amounting to €4.21b, while the Bank of Cyprus has cash and deposits amounting to €3.91b. This means that Hellenic Bank pays €16.84m in order to deposit its money in the ECB, and Bank of Cyprus is paying €15.64. It should be noted that this new policy will among other things, affect the state’s income from the special defence contribution (30% of interest income). The banks have a high cost of operation, in an low-interest rate environment, which limits their revenues. The result is that the potential for profitability is reduced. At the same time, the ECB’s low interest policy, will continue for a longer period than expected. According to Phileleftheros’ information, the state’s revenue from the special defence contribution stood at €461.49m in 2013, €416.18m in 2014, €329.09m in 2015, 259.51m in 2016, €277.84m in 2017, €269.99m in 2018. The first six months of 2019, the state’s income for the special defence contribution stood at €194.54, recording a 6.8% increase compared to 2018, when it stood at €182.09m. According to Central Bank data, total deposits in Cypriot banks amounted to €48.36b, of which €38.52m were linked to Cyprus-based individuals. According to ECB data, the average interest rate on the current deposits of companies and organisations in Cyprus and the Euro-area stood at 0.03%.







22 mountain communities in Limassol without a bank

22 mountain communities in the Limassol district with more than 5.000 permanent residents, were left without a bank after Hellenic decided to close down the last former Co-op branch of the region. The decision had caused an outrage and despair among the residents, who yesterday held a protest outside the Pachna branch. Haravgi notes that the Wine Village region had more than 15 bank branches, the majority of which belonged to the former Co-op. However, since 2016, the network started to shrink and only the Pachna branch was left. Furthermore, after the government’s decision on the Co-op, which was ratified after the state aid to Hellenic Bank was passed by DISY, DIKO, EDEK and ELAM, Hellenic decided to shut down the last branch of the former Co-op. It should be noted that before the Co-op-Hellenic deal, there were 172 Co-op branches and 52 Hellenic branches, while a total 125 branches will remain in operation by September. The branch closure in the mountain regions, mainly affects senior citizens and people with mobility problems as well as small business. In a statement to the paper, AKEL MP Giorgos Georgiou reported that the branch closure will be the end of the rural areas, which are already faced with a series of issues. He also said that the citizens’ protests is completely justified. At the same time, Pachna’s community leader, Andreas Savva said that in the past few months, the community leaders of the region met with all the party leaders, apart from DISY president, Averof Neophytou, who didn’t accept to meet with them and referred them to the party’s MPs in Limassol.



Banks are getting rid of NPLs; aiming to reduce their rate to below 8%

With a view to reduce their NPLs rate to below 10%, and specifically from 8-10%, Cyprus’ systemic banks are moving vigorously to rid their balance sheets from red loans. They are increasingly being pressured in 2019 by the European supervisors, and specifically from the European Banking Authority, the Single Supervisory Mechanism, the European Stability Mechanism and the European Central Bank, which aim to reduce the NPLs rate of each bank to 8-10%. As such, the Cypriot banking system has to reach the maximum allowed European level of 3% in terms of NPLs. Bloomberg’s story about Bank of Cyprus and Hellenic Bank, is rather revealing as it reports that the two systemic banks as well as Alpha Bank are far ahead in negotiations aiming to sell of red loans (worth up to €4b) to foreign investment funds. Specifically, according to Bloogmberg, Bank of Cyprus is preparing to sell off a second red loans package called Helix 2, which is estimated to be worth more than €2b, a year after selling off a portfolio worth €2.7. According to the same story, Hellenic Bank aims to sell-off a significant NPLs package to Pimco, which already hold a 17.3% stake in Hellenic. They have submitted a non-binding offer for the purchase of loans worth €500m. The binding offers procedure will open in September. As Bloomberg reports, Hellenic Bank aims to sell-off the majority of NPLs in its balance sheet, so that its NPL rate drops well below 10%. This move seems to be favoured by the conditions in the bank, which is expected to have increased profitability in the coming quarters. Alpha Bank is also near to a deal with a loan service, for its own NPLs package, which is close to €4b. According to the latest data announced by the Central Bank, the total NPLs in the Cypriot banking system amount to slightly over €10b.



Cyprus at the crossroads of pollution

Many thousands of commercial ships, including massive oil tankers, sail across the Eastern Mediterranean and the Mediterranean in general, and when combined with the 20 hydrocarbon platforms operating in the Levantine Deep Marine Basin, they constitute a high-risk indicator and a threat for huge marine pollution; and Cyprus is at the crossroads of it. Over recent times, the passage of merchant ships through the Suez Canal increased by 21%, reaching 18,000 in 2017. If we take into consideration the total of ships that sail through the region around the Suez Canal, the numbers are terrifying, Phileleftheros reports, as they approach 300,000 ships a year. in 2007-2011, hundreds of oil spills were tracked via satellite.



Airbnb is killing it

Rentals through platforms such as Airbnb are on the rise in Cyprus, according to a first report on the sector that was included in a special edition on tourism that was prepared by KPMG. According to the numbers, in 2018, 41,000 reservations were made through the platform, which was a 69% increase on the previous year. There was also a 19% increase in the number of properties that joined the platform. The KPMG study also showed how resilient the Cypriot tourism product is when it comes to uncertainties surrounding mainly Brexit. According to the forecasts based on the most optimistic scenario, Cypriot tourism will record a gradual increase in arrivals in the range of 4% by 2022. Based on the least optimistic scenario, this increase will be limited to 1%.



The Chinese prefer Egypt

The Egyptian tourism minister has described Egypt as one of her country’s most promising touristic markets, stressing how Chinese tourism to Egypt has increased by 50% in recent years. Phileleftheros reports that tourism from China to Cyprus is at very low levels. In the first half of this year we had 3,101 tourists from China, while in 2018 the number was 5,032.



Perdios made promises

Deputy Minister of Tourism Savvas Perdios said he was impressed with the touristic infrastructure and the potential for further development in Geroskipou, after being taken on a tour of the community by mayor Michalis Pavlides. The deputy minister said he would assist in the municipality’s efforts to create sporting facilities so as to develop sports tourism. The municipality has been seeking to acquire state-owned land for the past decade, in order to build 10 more football pitches near the sporting centre it already runs.

 

BoC Oncology centre joins GHS

Phileleftheros reports that the BoC Oncology Centre will officially join the GHS on 1 September, as they have already told their patients. Confusion ensued among the thousands of cancer patients, after articles were published online as regards the change of procedures and the need to obtain a chronic referral in view of the GHS. For this exact reason, in an announcement, PASYKAF (Cyprus Association of Cancer patients and friends) gave clear instructions to patients on the required course of action in order to ensure that they are able to receive services from the GHS framework. Meanwhile, according to Phileleftheros’ sources, the Confederation of Patients in Cyprus is in direct communication with the HIO in order to ensure a smooth transition, and avoid creating problems or burdening the patients in any way during the transitional period in September. PASYKAF also announced the GHS guidelines and explained them in detail.

 

High cost of living in the occupied areas burdens T/C

Politis reports that a survey was carried out in the occupied areas among members of the Turkish-Cypriot community. The findings show the difficult financial situation that T/Cs have to endure. In more detail, 57% consider the T/C community’s financial situation to be generally “bad”, while 67% report their personal financial situation to be “good”, as well as 65% say that their personal occupational situation is “good”. However, the majority of T/Cs are expecting that their finances will deteriorate within the next 12 months. Additionally, the results indicate that the most serious issues of the T/C community include the increase of prices/cost of living (38%) and the economy (30%), followed by unemployment (29%) and crime (22%). Lastly, the author reports that 58% of T/C individuals believe that the worst have yet to come in terms of the economy. At the same time, 50% of T/Cs view the European Union in a positive light.