Co-op CEO calls for society to grasp cost of strategic default


By Stelios Orphanides

The Cyprus Cooperative Bank’s chief executive Nicholas Hadjiyiannis said on Monday it is time for Cypriot society to realise banks must tackle strategic default, echoing comments made by his Bank of Cyprus colleague on Sunday.

Hadjiyiannis said in a telephone interview that while banks cannot ignore the sentiment in society against foreclosures “what strategic defaulters do is at the expense of the society and public opinion will have to acknowledge that”.

Obligations assumed by debtors “are there and cannot simply disappear” and as a result, consensual solutions are necessary, he added.

In an interview with the Cyprus News Agencyon Sunday, Bank of Cyprus Chief Executive John Hourican said he was getting “annoyed and impatient” with strategic defaulters – borrowers with the capacity to repay their debts opting not to do so – and appealed to society not to tolerate these actions.

Indicative of the current sentiment in the economy, four years after depositors at Bank of Cyprus and Cyprus Popular Bank – widely known as Laiki – lost money as a result of large portions of their loan portfolios not being serviced, there were demonstrations against and political opposition to government-owned Cyprus Cooperative Bank’s agreement with Spain’s non-performing loans specialist Altamira in early August. .

In addition, Hellenic Bank’s intention on September 7, to auction the foreclosed house of a strategic defaulter attracted a small crowd of protestors, including representatives of opposition parties, the Movement against Foreclosures and the neo-Nazi group Elam.

Hadjiyiannis said that while he could not quantify the percentage of strategic defaulters in the bank’s customer base, “finding solutions is definitely a difficult process as time is not a factor”.

Strategic defaulters, he added, do not feel that there is pressure as they do not feel that time is pressing.

In reality, “however there is no time left,” he said.

Banks, which since the 2013 crisis have been investing in infrastructure and knowhow on to deal with an increasing stock of non-performing loans and a non-payment culture among a some customers, now also need to create a “suitable atmosphere” to more effectively deal with strategic defaulters, Hadjiyiannis said.

The Co-op, which received in the form of capital injections in 2014 and 2015 almost €1.7 billion in taxpayers’ money, is struggling with a €7.2bn non-performing loan mountain, accounting for six tenths of its loan portfolio as of June 2017.

Economic growth in Cyprus, forecast to reach 3.6 per cent this year, has not yet led to an increase in loan repayments, he said adding that the bank therefore aims to increase its operational capacity with the deal with Altamira so that it can “process larger volumes”.


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

  • LMS

    Does anyone believe that a strategic defaulter cares even one tiny bit about society?

    • Roger Thecabinboy

      No, But society should accept that strategic defaulters are scum who deserve to have their property taken. I refer only to the “can pay but won’t pay” brigade – not those who took a modest amount of debt that they were capable of and were repaying out of income, but through no fault of their own (such as a change in circumstances) later found they could not.

  • Barry White

    Now that is a silly statement, Hadjiyiannis. Everyone knows that the strategic defaulter is someone, anyone other than ‘ Me’.

  • Didier Ouzaid

    ‘In reality, “however there is no time left,” he said.’

    Says who? economic fundamentals? Banks balance sheets? No one cares about them. In 7 years of deeper mess in Greece, they’ve pretty much exhausted every fiscal measure they could to avoid this kind of measure. How would it be different here, when we’re ‘officially’ out of the mess?

    Banks better find smth else to deal with their NPLs, cause this wont fly. Sometimes I think people would rather have a 2nd bail-in (which may or may not happen) than having to deal heads on with repos and auctions.

  • Bernard Smart

    I’m alright my family is alright. I have a nice big house and several nice cars thank you very much.
    Why should i bother paying for any of it? You can’t take these away from me!
    Or can you? No of course not this is Cyprus after-all. You lovely taxpayers will end up paying my obligations.

  • cyprus observer

    Wasting your breath. Nobody cares..
    So long as they are all right, their family is alright ….and the ATM machine still gives out cash. The very thought that Cypriot strategic defaulters care about society or the bigger picture on debt is absurd.

  • Neroli

    Nowhere else in Europe or maybe the rest of the world would banks put up with this! They are scum not paying their loans, they use depositors funds for their houses and not paying them back. Foreclose and do it quickly

  • konstabo

    this is depositors money , why should these people pay the banks back when the depositors which supplied this money to whom this money belongs have been taken out of the picture and the banks plan on collecting this money for themselves?????
    had the banks said we need to collect this money so that we can return it to its rightful owners then it would make sense that these loans should be paid back , but thats not the way they see it , they see it that the money belongs to them the banks and not there customers and it must be returned immediately so that the bankers can continue to put bread on there table since now that the rightful owners have been taken out of the way the money can go directly to the banks because now it belongs to them……

  • Seize the collateral immediately and pursue the guarantors.

  • Kevin Ingham

    People’s priorities are very simple- they put themselves first, their families second, their friends third, their country fourth and their bank last

    Sure NPL’s are a massive problem that need to be addressed, but if all the banks have to fall back on is appealing to individuals’ sense of duty then they are is deeper doodoo than you can possibly imagine

    It used to say be that “if you owe the bank $100 that’s your problem. If you owe the bank $100 million, that’s the bank’s problem” Only in Cyprus could it be that if everyone owes the bank $100 then it’s actually the banks problem too

    Sorting out the banks is going to be a financial bloodbath. We either have repossessions and foreclosures that create huge deflationary wave that will engulf much of the country, or we have another haircut that does something similar. Relying on people to start paying back their loans when many of them must know what is coming is a bit like putting your faith in the tooth fairy