Hourican announces more action to reduce NPLs

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By Stelios Orphanides

Bank of Cyprus’s chief executive John Patrick Hourican said that the lender is considering unspecified steps to accelerate the reduction of its “monstrous” non-performing loans that make half of the total portfolio.

Hourican, who was commenting in an interview with Bloomberg TV, said that “what I would try to do is focus on transformational trade”.

“So, it wouldn’t surprise you that we are looking at a series of potential transformational trades to accelerate the journey and finish early, but we cannot announce what they are yet,” the Irish banker said, adding that these alternatives would help the bank avoid an organic reduction of non-performing loans “down to the right numbers” which could take years.

So far, he said the bank has shifted out bad loans worth 22 per cent of Cyprus’s annual economic output, reducing them from a peak of 63 per cent of total loans to “just below 50 per cent”.

“We are taking 6 per cent of GDP (gross domestic product) off our balance sheet on a six-monthly basis,” he said. “That is huge numbers”.

The Irish banker who has been at the helm of the bank since late 2013, the year in which the lender converted almost half of uninsured customer deposits into equity as part of Cyprus’s bailout agreement, said that after the island completed its loan-for-reforms programme it may serve as “a story that will be a case study on how to behave as a small county in the context of the big Europe”.

After Cyprus’s economy expanded 2.8 per cent last year — making it “the second fastest growing economy in Europe, we expect similar numbers this year,” he said.

Economic recovery, is broad-based with rising tourism numbers, he said, adding that “out of its bailout, (Cyprus is) looking like it is behaving well, with British common law”.

“But Cyprus, in the context of its peers, has been doing everything it would said it would do,” Bank of Cyprus’s top executive said. “Maybe it should have done more reform in labour reform or few other areas, like privatisation, but in general this country has behaved impeccably in giving he confidence by investors, when it says it’s going to do something it does it”.

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About Author

Stelios Orphanides is a journalist at CyprusBusinessMail.com. To contact Stelios Orphanides: [email protected]

  • Eye on Cyprus

    At last, someone in authority is using terms like ‘monstrous’ to describe NPLs. Meanwhile, the Government is constantly crowing about a ‘recovery’. The two ideas seem incongruous.

    • peemdubya

      Never see any mention of any meeting between Haris Georgiadis and JP – perhaps it is time???

      • Caulkhead

        Perhaps they just don’t meet in public. This sounds like the first attempt at warming up HG’s bit for the presidency.

  • Philippos

    I was watching the Bloomberg interview this morning and I must admit to having a little giggle. Sounding more like a Government Minister or Spokesman, a nice gloss was applied to all subjects, preceded by that bloody awful video clip, “Invest in Cyprus Invest in US” now with all that’s gone on and is still going on who in their right mind would want do that?. Back to JP – as Mandy Rice Davies once said “Well he would wouldn’t he”. If he plans to “dump” a load of Cyprus NPL’s on “Investors” whom he has to get to believe that they would sometime get their money back plus a profit for the risk, he has to convince them that all is well here. Now the USD 64,000 Question – ‘Why does he have 50% NPL’s? and a low attrition rate that he wants to speed up because it is suffocating the Bank? Because NO ONE has or is paying back the loans, many of which are “under water”. So, if they will not pay the Bank back, why will they repay an Investor, unless its one of the “Mobs”? He will probably sanction the move and then its time for him to go. Etsi H Zwn, Always was always will be.

  • JS Gost

    Which ever way you cut it, whichever clever words you use and no amount of fancy accountancy can hide the fact that crisis 2 is just around the corner. The banks are still broken, civil service remains the same, unions are too powerful and none of the MoU promises have been met; more importantly the people see nothing wrong and still blame everyone else. I know Hourican is trying his best but even he is beginning to see the futility of trying to save BoC, let alone the RoC. Being a smart man I am sure he now has a solid exit plan worked out as he must be aware of the fate that awaits when AKEL come to power next year, taking away any vestige of power he still has.

    • divadi bear

      JS Gost
      NO PLEASE !!! Not AKEL on the ” throne” here !!!!
      If those Communist run the place it will ONLY be into the ground completely !!!
      Communism does NOT work unless you have 10 million Chinese who truly believe they will be slaves all their lives and die at a young age just to keep those on the great big Gravy Train alive !!!

  • costas

    practically if history is right, the Bank of Cyprus, the Co op, should have never lent so much in the first place, then it would not have to make all these measures to reduce bad debts

  • Barry White

    An old finance expression comes to mind when reading Mr. H’s words: ” A Banker talking his book”.

    • Rory Keelan

      Indeed – ‘smoke and mirrors’.

  • desres

    The BOC cleared a well known developers NPL by accepting the properties back, then lent him 20 million to build another golf course!

  • Douglas

    ‘NPL’ are well documented and dealt with in many other Countries,properties are foreclosed,occupants evicted,property is sent to action houses, outstanding debt after sale are sold to debt collectors,job done ?