Co-op’s NPLs to drop by €1bn before year end, CNA reports

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By Stelios Orphanides

The state-owned Cyprus Cooperative Bank expects to reduce its non-performing loans stock of €7.2bn by over €1bn before the end of the year, the Cyprus News Agency reported on Friday without citing a source.

The lender, which received almost €1.7bn in taxpayers’ money in the form of capital injection in 2014 and 2015, is expected see its non-performing loans drop to slightly over €6bn and the reduction to continue over the quarters to follow, the agency reported without revealing the source of its the information.

On August 22, the bank’s chief executive officer Nicholas Hadjiyiannis said that he expected earnings in the third and fourth quarter this year to reflect an expected drop in delinquent loans, adding that an immediate “considerable reduction” was as an “imperative”.

The bank, which following the 2015 capital increase exhausted all available margins for tapping state aid, is working on a Cyprus Stock Exchange listing which will allow it to raise private capital via the successive share issues over a three-year period starting next year.

On August 21, Yiangos Demetriou, the head of the Central Bank of Cyprus’s supervision department, said that governor Chrystalla Georghadji asked finance minister Harris Georgiades to delay the implementation of a government decision to donate Co-op stock in the possession of the government until the bank completed the first stage of its capital increase. He also warned that the bank could go out of business unless it was allowed to implement its plans to reduce bad loans.

In July, the Co-op announced an agreement with Spain’s Altamira for the management of its non-performing loans and real estate assets.

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About Author

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

  • I’llbeback

    I wonder If its regular (non millionaire) people who are the ones paying off their NPLs rather than the large developers?

    • Neroli

      And the millionaire people who are not developers?? A few MPs and lawmakers maybe?

  • Barry White

    Clearly a scramble going on at the Coop, the NPL can be wipped out overnight. Simply tell the borrower with the huge unpaid loan with unpaid interest that the Bank has cancelled it and you need to pay nothing. Job done and line up for another loan on the never, never.

    AKEL card carriers move to the front of the line.

    Life is good for the connected deadbeats. Roll on the next State bankruptcy.

  • Terryw45

    And I’m expecting to see Father Christmas coming down the chimney before the end of the year !

    • SuzieQ

      Yes you’re right! He comes to my house every year when I’m asleep, and expect him again before year end. 😉

  • Neroli

    Yeeeea suuuure! And pigs might fly!

  • Caulkhead

    Loans probably just restructured and will be NPLs again in six months time!

    • divadi bear

      Alex R. That’s what they have been doing all along. They erase the first NPL which is long overdue for repaying, put it at the bottom of the list and enter that same NPL as having been paid in the hope that it will disappear in the confusion !!
      That is what the government call “restructuring”.

  • Alexander Reuterswärd

    they will write off loans for a billion to friends and family

  • Bruce

    It is very good to say you are going to reduce NPLs by one billion euro by the end of 2017, but how you do it is what matters for the longer-term interests of the Coop and struggling , hopefully honest, borrowers. My view is that the Coop has reached an agreement with Altamira to sell a package of NPLs valued in total at one billion euro. Since the provisions for these NPLs may be at 30% of their book value of say 1.2 billion euro the Coop could write back say 160 million euro to capital as accounting gains and mitigate their short-term capital needs. Such an agreement is unlikely to help borrowers with the NPLs underlying the package to restructure their loans and start repaying. More likely Altamira will demand repayment of loans outstanding with a discount of around 17 to 18% and try to exercise the seizure of property after the Presidential elections if unsuccessful in debt collection. Under this scenario the Coop could claim that it has reduced its NPLs substantially and lowered its needs for new capital.