Daily Press Review - 30/10/2019

Hellenic Bank demonstrates confidence in insurance sector

Same as above with Kathimerini also reporting that the deal is considered as a “vote of confidence” as it puts an end to the scenarios for a possible cooperation of the bank with other insurance groups, decommissioning its own. The transaction is subject to regulatory approvals and is expected to be completed in the first quarter of 2020. Even though no information was published on the value of the deal, the acquisition is expected to amount to €5-8m. If one considers that CNP purchased 49% of BoC’s stake for €97.5m, then purchasing 27.5% of an insurance company that is 10 times smaller than the Cypriot CNP, cannot exceed €5-7m. This is why the bank has said that the deal will not significantly affect the capital ratios and the financial position of the Hellenic Bank group. As it was officially recorded, following the acquisition of certain assets and liabilities of ex Cyprus Cooperative Bank Ltd and related clientele base, the Bank’s Management identified the opportunity to grow its business in the insurance sector and create further value through its subsidiaries. Hence, the Bank will focus on transforming and repositioning its insurance subsidiary companies in order to realize their full potential and enhance their position in the Cyprus market. “The above transaction is also in line with the Bank’s group continuous strategy to grow its fee income”, the announcement adds. The General Manager of MetLife Cyprus Mr Kyriacos Apostolides said: “The successful consortium resulted from the hard work of the personnel of MetLife Cyprus, which supported the cooperation all these years. I would like to thank each and everyone of them for their efforts, and their contribution to this successful course. I would like to thank everyone at Hellenic Bank for the excellent cooperation and I wish every success for the firm. The acquisition will in no way impact the insurance contracts of MetLife Europe customers and the current terms and conditions that will continue to be valid”. On his part, the Bank’s CEO, Ioannis Matsis stressed that “the acquisition is in line with our strategy to transform and reposition our insurance subsidiaries and our bancassurance distribution model in order to enhance the total income from insurance. I would like to thank MetLife for the professionalism and devotion it has demonstrated, which led to a successful long-term partnership through Hellenic Alico Life”.



HFC allocated €300K for appointment of asset management company

The House Finance Corporation has prepared an aggressive plan to reduce its NPLs by 90.5% over the next three years. In its budget for 2020, it allocated a €300K budget line for the appointment of a specialised asset management company, like Altamira, to manage its NPLs. According to a memo that was submitted to the House, the Corporation’s NPLs in the end of the first semester amounted to €298.4m, while according to their plan the Corporation expects to reduce its NPLs to €293.9m until the end of the year, with this subsiding further to €228.2m by the end of 2020. It is projected that the its NPLs will drop further to €59.8m by 2021, while by 2022 they will drop to €28.4m.

 

Harris: “Everything’s ready” for e-auctions

The Minister of Finance announced the launch of e-auctions within the next few days, in statements after the House Finance Committee meeting, which started with a discussion on the state budget for 2020. As he said, the decree that is expected to launch the electronic auctions is ready, and is expected to be implemented very soon. It should be noted that the first e-auction was recently implemented and was said to be a first “test” as most of the assets that were sold belong to the banks, which acquired them through debt-to-asset swaps. It should be noted that the Ministry’s note, which was submitted to the House along with the 2020 budget, it is reported that they are expecting important NPL sales. In the meantime, Harris Georgiades announced that they are looking into extending the deadline of applications to ESTIA.



A possible extension for ESTIA

Everything is still rather vague on ESTIA, 16 days before the deadline for applications expires. The borrowers’ limited interest has led the government to start thinking about granting an extension of a few weeks. Even though the MoF didn’t proceed to an official announcement yesterday, he distinctly said that if the government deems that an extension of a few weeks is necessary, they will look into it. According to the Phileleftheros’ sources, if the government grants an extension this will not exceed 3 weeks.



Citizenship-by-investment: Small impact on growth

MoF Harris Georgiades underlined that if the country’s citizenship-by-investment scheme was terminated today, the growth prospects of the Cypriot economy would remain strong and would not be affected. Over the period 2016-2016, the country’s GDP increased by 15.2%, of which 1.2% concerned construction activity, which was directly linked to the Cypriot investment programme. According to the MoF, the transactions related to the programme amount to around €6.7b; these transactions are added to the GDP only when they concern production (real investment). “We should not consider that the entire Cypriot economy is related to the programme, cancelling other sectors such as tourism, services, education, trade and the up-and-coming energy sector”, Georgiades stressed.



Averof Neofytou: 8 bills for borrowers

The discussion on 8 bills by ruling party DISY began yesterday at the House Finance Committee. The bills incentivise borrowers to settle their obligations and find solutions with the banks in order to reduce or repay their loans. As the president of DISY, Averof Neofytou said in a written statement, the seven bills are already in place but they must be renewed for another year. They relate to the immediate exemption from a series of taxes, when borrowers proceed with debt-to-asset swaps or they sell their property to third parties to settle a loan or when they sell or concede their immovable property to relatives or connected companies. The bills also settle a scenario where a property is valued higher than the debt. In this case, only the difference will be paid. Moreover, with the eighth bill, which is new, the government is correcting a distortion that has so far hindered debt settlements. The bill will end the consideration of debt write-offs as an accounting profit in the context of debt settlements and as such, the borrower will not have to pay an extraordinary contribution because of a deemed distribution of dividends.



The investment programme with incentive for foreign investors

Opinion article by the Director of the President's Press Office, Victoras Papadopoulos, which is a response to criticism the government has been receiving by main opposition AKEL over its citizenship-by-investment scheme. He says the island’s investment programme, which provides incentives to foreign investors and citizenship, has proved in action to be a very important, short-term source of inflow of fresh money to Cyprus, amid a transitional period of the economy’s recovery, its exit from the bailout memorandum and its return to growth and the international markets. Papadopoulos says that the revised investment programme that was launched by the Nicos Anastasiades administration has achieved its short- and medium-term targets. Fresh foreign funds flowed to the country, many sectors of the economy were supported and especially from the construction sector and indeed without any lending, so there was no bubble. At the same time, not only were property prices contained, there was also a drop in unemployment. And then there were all the other sectors that the government put emphasis on, such as education, tourism, renewable energy sources, marinas, the casino, agriculture, shipping, the privatisation of Limassol port and much more, which along with a prudent fiscal policy led to a swifter exit from the bailout memorandum.



Havadis: Rumours of a military base in Trikomo

Turkish Cypriot daily Havadis newspaper reported yesterday that rumours of a military base being set up in a coastal area of occupied Trikomos has caused reactions. According to the paper, the base will be set up on plots of land that neighbour hotels, near a bay that has a port that is used to export carobs. It said the relevant “permits” have already been issued and a ban has been imposed on taking photographs in the area. Speaking to the paper, businesspeople and residents of the area said that the creation of a military base would impact on tourism, which has been growing at an accelerated rate in recent years. The plans to include ammunition depots are also raising safety concerns. The so-called “town-planning scheme” for the area defines that hotels of up to four storeys can be built, while there are also provisions for bike lanes, beaches and green areas.



In talks to purchase two boats

The Republic of Cyprus is in talks with two French companies to purchase two state-of-the-art patrol boats worth €75m. According to a report on French website La Tribune, the OPV50 boats in question are by the company Kership, subsidiary of Piriou and Naval Group. Even though Paris wants to sell them, said the site, Nicosia is on hold, most likely for financial reasons. The transaction is part of the broader positive climate in France-Cyprus relations, and the intention is to expand the Mari naval base. During a visit to Paris in May 2019, Defence Minister Savvas Angelides and French Minister of the Armed Forces Florence Parly signed a relevant agreement, to turn Mari into a permanent refuelling base for French frigates.







No safeguards for security guards

The problems faced by private security guards were discussed at a meeting by the relevant branch of PEO union. In an announcement afterwards, the union said that the relevant profession has been growing rapidly in recent years, employs thousands of Cypriots and migrants, with the only criteria being to have a clean criminal record and in the case of men, an army release paper. The salaries are based on the minimum income decree, though inadequate supervision means that some are not even being paid that. The tender procedure is such that the cheapest bidder is selected. The union said the relevant legal framework needs to be improved. It said it was unheard of that the same criteria are used to employ warehouse guards, airport security guards, port guards or money transfer guards.



Agreement for Aphrodite

Politis reports that yesterday's statement by the President that Cyprus will move on with its energy program and sign agreements for the exploitation of the natural gas found in the Cyprus EEZ, was actually referring to the Aphrodite deposit taking into account that the negotiations of the Ministry of Energy with the Noble-Shell-Delek consortium for concluding a development plan of the deposit is going very well.  It is in fact a matter of days before the agreement and set timetables are ready for signatures. The conclusion of the agreement by both sides, was preceded by the relevant contract amendments on the proportional revenue distribution.



Live Erdogan connection with frigate in Eastern Mediterranean

Turkish President Tayyip Erdogan made a live connection with the frigate Yokceada in the eastern Mediterranean accompanying Turkish drilling ships during his speech at a ceremony in Ankara on the occasion of its 29th anniversary. According to Erdogan, ‘in these territories (in the eastern Mediterranean) we have rights, we have rights in the seas. We have no business where we don’t have rights’.



DIVERSA not moving forward with Cobalt acquisition

Greek company DIVERSA is no longer interested in acquiring Cobalt Air, according to the company’s announcement at the Athens Stock Exchange. In its announcement, the company notes that the investigation of the buyout of the airline Cobalt Air Ltd based in Cyprus, was not in the interests of the company and as such DIVERSA retracted its interest.



Larnaca - Krasnodar twinning complete

The second phase of the twinning of Larnaca with the Russian town Krasnodar took place on 25 October, during a ceremony at the Larnaca Municipal Gallery in the presence of the Russian Ambassador, MPs, party representatives and other organised bodies. A four-member delegation from Krasnodar, led by the town’s Mayor Evgeny Pervyshov, also visited the town to attend the ceremony. During the delegation’s three-day stay in Larnaca, meetings were held with various stakeholders, with the matters discussed including tourism, culture, commerce and business between the two towns.



Need for a comprehensive national strategy on tourism

Opinion article by KPMG Board Member Sofoclis Sofocleous, who argues that the concentration of a large market share to a small number of foreign tourist operators, gives them an unmatched negotiating potential (as it comes to deals with hoteliers), as well as creates a significant risk in the case where one of these organisations collapses (similar to what happened with Thomas Cook). In order to mitigate this risk, the author argues that we need to disperse it so that any negative development can be immediately absorbed. On the other hand, one could say that there is no choice, since the specific organisations choose to cooperate with Cypriot businesses. What we need to look into, he says, is how can we attract more tour operators, in order to disperse the market share to more firms, thereby increasing demand for holidays in Cyprus. This has not happened until today and there are many reasons for that, our “tired product”, the huge competition and our mentality of not planning for tomorrow, when things are currently going well. He also argues that we do not assess the problems that will likely arise, for example due to a significant reduction in demand for real estate from abroad. In the past years, there have been significant investments in the tourism sector, with hotel acquisitions, renovations, construction of new hotels, with the involvement of global actors. However, he argues, we did not manage as a country, to develop the so-called alternative types of tourism, or we potentially thought that the creation of the casino, was for now enough to enhance our tourist product.



Supply of 80 medicines in November

80 different medicines are expected to arrive in Cyprus starting tomorrow until the end of November, but most of these are expected to arrive within the next couple of weeks. The Health Insurance Organisation (HIO) was given specific dates between December and January for the import of 10 other medicines, while a much smaller quantity of medicines is expected to arrive by early March. Last week, the finalised catalogue of medicine shortages in the GHS, was shared among health professionals, doctors and pharmacists. The catalogue contains 162 different products of which the majority, meaning 121, will re-enter the market in the upcoming weeks, and only 31 medicines will be discontinued from the Cypriot market. The discontinued pharmaceuticals are either because Cypriot manufacturers have stopped producing them or due to import companies having decided to stop importing them.  It’s worth noting that out of a 162 products included in the catalogue, only 4 don’t have interchangeable replacement. For those 4 products, the HIO will be ensuring that private pharmacies have them on stock through state-owned storages.



Doctors’ waiting list

The mass registration of private doctors in the GHS overthrows the negative image that had been created in the previous months due to CyMA’s negative stance. Today, HIO’s employees are rushing to draft the contracts for the doctors’ registration. The mass registration of doctors over the last and a half months has in fact created a waiting list of two weeks in the organisation, which makes huge efforts to handle the bureaucracy as soon as possible. Because of these delays, the doctors complaining about waiting to sign their contracts. As of yesterday, there were more than 100 applications by private doctors of all specialisations and according to the HIO’s Deputy Director Efi Kammitsi “the organisation is sparing no effort in order to assist the doctors as soon as possible”. She added that at the moment there is in fact a two-week delay, but she calls doctors “to be patient and understanding as they all went to register at the same time, which creates some sort of delay by itself”. As of yesterday, there was a total 1,652 doctors registered in the GHS. 687 are OKYPY doctors and 965 are private practitioners. In total the GHS has 1,031 specialised doctors, 422 GPs for adults and 159 paediatricians. It’s particularly interesting that 124 cardiologists have joined the GHS (50 OKYPY), while 88 gynaecologists have joined (29 OKYPY).



Doctors hired to staff state hospitals

OKYPY’s spokesperson Pampos Charilaou, stated that by early next week the state hospitals’ needs will be mostly covered by the 61 vacancies that the organisation had announced a while back. In an interview with “Astra” yesterday, Pampos Charilaou said that in November, 13 doctors will be hired at the A&E departments of state hospitals, while they’ve completed interviews for 28 doctors. The goal, he added, is to have 2 doctors for each shift, noting that no department will be left without at least one doctor. He highlighted the importance of staffing Paphos General Hospital, following the recent resignations.  



Green light for health funds for SGOs

The Government agrees that health funds for semi-governmental organisations (SGOs) should be continued as an addition to the GHS. A few days prior to EAC employees’ strike, due to the abolition of health funds on 1 June 2020, the Government supports in maintaining the relevant funds, which will cover services not offered in the GHS. Yesterday, the FinMin Harris Georgiades, stated that it’s inconceivable that the government, as the pioneer of the GHS, agrees that some groups of employees maintain their previous health plans. However, he also stated that for benefits or services which are not offered in the GHS, the Government supports the creation of a new fund, in order to meet those needs.



Green Tax Reform

FinMin Harris Georgiades described the double goal of the proposed Green Tax Reform, while he explained that modern financial trends are heading for reform, thereby increasing the tax on energy-intensive and environment-burdening services and products. Yesterday, while speaking to the House, the FinMin reiterated that taxation is moving away from income and wealth tax and focusing on activities which burden the environment. The basic principle of the new tax reform is that it will be neutral. The Green Tax Reform is in favour of implementing the national strategy for climate and energy, and is committed to reducing greenhouse gas emissions by 24% over the next decade. The new circular economy model requires a new taxation model, says TEPAK professor Dr. Theodoros Zachariadis, who is collaborating with the Ministry of Finance on finalising its Green Tax Reform proposal. He explained to Politis what ‘Green Tax Reform’ means, and its benefits for Cypriots.  According to the professor, it will be difficult for Cyprus to reach its goals for energy and climate, if financial incentives are not enforced in the framework of the Green Tax. SEK is also supportive of this reform, and in fact it’s already pushing for the environmental tax revenue (especially fuel, which will be subject to a progressively increasing tax) to be returned in the shape of income tax relief. In this way, green taxation will also be turned into a redistribution tool.