“Junk” and “silver” up for sale
Bank of Cyprus (BoC) may have gotten rid of its “junk”, but it will now be interesting to see what it will do with its “silver”; the same applies for Hellenic Bank. The second phase of selling NPLs has just begun. For the borrowers whose loans have passed into the hands of investors, the only real way out, it seems, is foreclosure. The sale of a problematic loan portfolio by BoC to B2Holding in the first week of 2020 signalled that we have entered the next chapter in the “drama” that is NPLs. The €400m package consisted of consumption and small business loans without collateral, with sources saying that this will not lead to any significant changes for the bank. So, in other words, the bank has gotten rid of its “junk”, politis.com.cy reports; namely loans that had been written off through provisions and which cost more to manage than they would ever bring in for the bank. The site reminds that B2Kapital Cyprus was the first to acquire problematic loans worth €144m from Hellenic Bank (HB) in 2018. Following this move, BoC and HB are expected to get rid of the majority of their NPLs in the immediate future. It is no secret. The banks have announced this, while the Central Bank Governor also said it at the House. And they are also being pushed by the European Central Bank, which has indirectly stressed that the banking union cannot proceed unless the risks in the banks’ portfolios have been reduced. The big question now is, how much will it cost the banks to sell the loans? The price, the provisions that have been taken, but also the quality of the portfolios have been occupying the banks’ managements and shareholders.
APS: Contributes to reducing bad loans
The financial crisis in 2008 severely impacted on the Cypriot banks, leading to a huge NPL rate of 54% in 2014. Over the following years, the rate reduced to 29.8% (according to June 2019 data), with the biggest reduction of -32.2% taking place between the third quarter of 2017 and the third quarter of 2018. APS is pleased to have contributed to the banks’ deleveraging efforts, which in turn led to an improvement of the Cypriot banking sector’s resilience and an upgrade of the Cyprus economy’s international image. APS CEO Martin Machon said that the high volumes of NPLs have a negative impact on the banks’ lending abilities. However, when the banks move this toxic debt outside of their portfolios, the inflow of capital can be used to grant loans to consumers and companies, which in turn encourages economic growth and overall prosperity, he said. APS, a leading debt investor and manager in Central and Southeast Europe, began its activities in Cyprus in July 2017, when APS Debt Servicing Cyprus was founded through a joint operation with Hellenic Bank. APS Debt Servicing Cyprus was the first debt servicing platform that found itself in the difficult position of being established in Cyprus and managing an NPL portfolio in Greece, estimated at around €2.1b with properties worth around €200m. Another significant achievement was the contractual agreement in 2019 to manage loans without collateral with a retail value of €245m, which APS Management Ltd acquired from BoC. The portfolio includes around 8,800 consumption loans and 900 small and medium sized business loans, and is under the management of APS Debt Servicing Cyprus.
Paying off the mortgage with rent instalments
An Irish-type housing model is being promoted in Cyprus, a scheme called “mortgage to rent”, which will allow borrowers with NPLs who are facing financial difficulties to continue living in their home. The scheme – which has been proposed to the Finance Ministry, credit institutions and asset management companies – has not been officially approved yet. But if approved, the borrower will be able to transfer his/her property to the bank or asset management company, the debt or part of the debt will be “written off” (depending on the value of the property) and then he/she will continue to living in the property by paying rent. According to the Irish model, borrowers will go from owners of the property to social tenants of a housing union, which purchases the home from the borrower. So, the borrowers will no longer have ownership rights over the property; just continue to live in the property as they would if they were renting anywhere else. As for how much the rent will be, sources tell Kathimerini that it will be much lower than if the borrowers rented elsewhere. It will be determined based on the household’s income. For example, if a borrower has an income of €1,000 and their loan instalment is €600, as when they first took out the loan in early 2000 their salary was €2,000, then the rent will now be around €300. The “mortgage to rent” scheme has already been presented to state asset management company KEDIPES and the Finance Ministry. It is also expected to be presented to one of the island’s two biggest banks, most likely BoC, which has more NPLs than Hellenic Bank.
HFC seeking NPL manager
The Housing Finance Corporation (HFC) has opened a tender to assign a company to manage its NPLs. It has some 2,500 NPLs worth around €250m. Expressions of interest must be submitted by 28 February, while the final contracts are expected to be signed within two months from when the bids are submitted.
Parties in the cycle of lost NPLs
The infamous list of politically exposed persons’ (PEPs) NPLs may have been the subject of debate on a number of television panels this week, however, it appears that the matter will not be discussed at Thursday’s House Watchdog Committee meeting after all. A row has broken out over the matter between ruling DISY and main opposition AKEL. DISY president Averof Neophytou said that his party was in favour of everything coming to light, adding that this did not just concern MPs but all PEPs. DISY spokesman Demetris Demetriou wondered why AKEL was not taking a clear stance on the matter. AKEL spokesman Stefanos Stefanou responded that one of the biggest fighters for this matter to be brought to light was AKEL MP Irene Charalambidou, adding that the party was in full communication and consultation with her.
42nd Annual Hotel Conference
The Cyprus Hotel Association announces the organisation of the 42nd Annual Hotel Conference, which will be held on 25 February 2020 at the Hilton Hotel in Nicosia (from 9:00-16:00). The general theme of the Conference, which will be held in both English and Greek (with automatic translation from Greek to English for the foreign partners): is Streamlining our vision for Cyprus tourism in the next decade. City of Dreams Mediterranean is the Gold Sponsor of the Conference.
Cyprus: Attractive destination for shipping companies from abroad
The Cyprus Shipping Chamber welcomes the arrival of yet another maritime insurance company Steamship Mutual Underwriting Association Europe Limited that decided to operate through the above company, based in Cyprus, for its European insurance activities. The arrival of new shipping companies and shipping related companies are a result of the further strengthening of the Cypriot shipping industry’s competitiveness and for the reason it provides stability and business growth opportunities. According to information from the Deputy Ministry of Shipping, the number of companies registered in the tonnage tax system while the number of companies that have their headquarters in Cyprus has increased by 33% in the last two years.
Ferry connection Cyprus–Greece is coming soon
The ferry connection between Cyprus and Greece is expected to begin next summer though the European Commission is expected to approve the plan within the next month. As pointed out by Deputy Shipping Minister, Natasa Pilidou, there is sufficient interest expressed by many Cypriot, Greek, and European shipowners. The cost of the ticket is expected to be about 130 euros incl. port taxes and of course will depend on each ship owning company’s pricing policy.
We and the Turks will carry on with drillings
Following yesterday’s closed door briefing of the House Energy Committee by the Minister of Energy Yiorgos Lakkotrypis, members of the House Energy committee expressed both satisfaction about continuation of the implementation of the Republic of Cyprus’ energy plans, and at the same time, concern over the escalating tensions caused by Turkey in the Cyprus EEZ. A significant part of the discussion was consumed about the new illegal drilling in Block 8 of the Cyprus EEZ by the Turkish drillship ‘Yavuz’ and the particularities of this particular choice by Turkey. The government was criticized by members of the opposition parties that it had insisted a few years ago that Turkey would be unable to secure drilling facilities and later on that the Turkish TRAO company would be unable to secure the appropriate know-how and partners for drilling. The Chairman of the Energy Committee, Andreas Kyprianou, said we are going through a difficult and dangerous period but Cyprus continues to exercise its sovereign rights and we welcome it. Asked about the state exploitation of the deposits at Glaucus-1 for a 5-8 trillion cubic feet and Kalypso for another 2 trillion cubic feet and more in the future, Minister Lakkotrypis said that following the exploitation of the Aphrodite deposit at Egypt’s Idku terminal, the strategic choice would be the construction of a land-based LNG terminal although additional quantities from Cyprus or Israel will be needed. A second option is the floating LNG unit, and another choice is the EastMed pipeline after the techno-economic studies are completed. Among the choices of the companies remains the utilization of the pipeline used for the transport of Cypriot gas to the terminal in Egypt. The Minister expressed optimism about concluding the agreement on the Aphrodite deposit with Israel very soon.
GHS services through ID now
Organised patients’ group (OSAK) visited the Health Insurance Organisation’s (HIO) offices with a lengthy memorandum, and called the organisation to make decisions relating to patients’ service in the GHS, highlighted the problems concerning the pharmaceutical sector and demanded to be informed about the process of establishing protocols for various medical specialties. Concerned with recent complaints about patients’ personal data violations, OSAK demanded the protection of citizens and that they be properly informed on how patients should be treated by GHS providers. In fact, on this particular issue, the HIO said they are preparing an announcement with which GHS beneficiaries will be called to use their ID when going to pharmacies, clinical labs, diagnostic centres, doctors’ offices, etc, avoiding having their information stolen and illegally used from anyone else.
Flu epidemic still being monitored
The course of the Flu epidemic is still being monitored by the competent authorities, even though the number of confirmed cases is considered as normal for the season. The Health Monitoring Unit of the Ministry of Health continues to be ready to tackle a potential surge in the number of cases. According to the Director of the Medical Services, Elissavet Constantinou, from 30 September until today, there have been 270 confirmed cases, 60 of which were children under 15 years old. The largest number of cases is still being recorded in Limassol. The Director of the Medical Services was yet again reassuring, saying that this year’s flu epidemic was milder than last year. “The numbers recorded are normal and the citizens must be more careful when they present symptoms, but there is not a reason to panic”. Cypriot paediatricians also made recommendations for the better prevention of the flue, since most cases this year were children. Experts stress that the best way to avoid getting the flu, is to vaccinate and follow a strict personal hygiene regime. They also call on the citizens to stay home in case they’re sick in order to avoid spreading the virus. “The Medical Services will continue to monitor the course of the Flu and will continue to inform the public about any developments”, said Constantinou.
OKYPY ready for potential Coronavirus case
“Cyprus’ state hospitals are ready to treat any suspected cases of Coronavirus”, OKYPY’s spokesman, Charalambos Charilaou said in interview to Astra radio yesterday. He said that the hospitals have established an action plan, infrastructure and quarantine rooms. He added that the State Health Services Organisation is cooperating with the Ministry of Health, in order to implement the protocols sent by the World Health Organisation. Mr Charilaou also said that the medical and nurse staff of the state hospitals is being constantly trained about the situation. As the Minister of Health said yesterday, over the past few days, the Ministry’s Infectious Disease Control Unit was established in order to monitor the development of the virus.
ExxonMobil/ESSO sponsoring 25th “KENTHEA” conference
In the context of its Corporate Responsibility ExxonMobil/ESSO Cyprus, continues to support Drug Information and Treatment Centre “KENTHEA”, acknowledging its valuable work. To this end, ExxonMobil/ESSO Cyprus will sponsor the 25th “KENTHEA” conference, and this year’s theme will focus on “Smoking and the new forms of smoking”, which is under the auspices of the President of the Republic.
Özersay discussed trade between UK and the occupied areas
“Foreign Minister” of the occupied areas Kudret Özersay discussed the issue of trade and trade relations between Turkish-Cypriots and the UK. Özersay attended a meeting at the House of Lords attended by its members, MPs and diplomats. During the meeting, he mentioned that Brexit could provide an opportunity, as it did years ago, for Turkish-Cypriots to sell their products to the UK, and that opportunity – he added – could be exploited by both, underlining the importance of T/Cs expanding their trade relations.
Alphamega Hypermarkets & Unilever hand out reusable containers
Alphamega Hypermarkets and Unilever presented their joint action aiming to reduce single-use-plastics at schools on Friday, 24 January. The campaign under the theme “We take care of SCHOOLS, we protect the ENVIRONMENT”, has been implemented in cooperation with the Cyprus Marine Environment Protection Association (CYMEPA). The initiative’s goal was to make schools friendlier to the environment, ensuring a better future for our children. This campaign allows 996 students to bring their daily snack and water in reusable containers. With this method they aim to reduce single-use-plastics at schools and create the conditions for sustainable schools in Cyprus.