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”.