Co-op bad loans reduced to €6.5bn

16

By Stelios Orphanides

Since August 1, the state-owned Cyprus Cooperative Bank has reduced its non-performing loans by €670m to €6.5bn, an executive was quoted as saying by the Cyprus News Agency (CNA).

Varnavas Karounas, who was talking to reporters on Monday, said that by applying a new strategic plan, the lender, was able to reduce its delinquent loan portfolio by 13 per cent since 2015 when it peaked at €7.6bn, CNA reported.

The new strategic plan helped achieve a 9 per cent reduction since August 2017 alone, he added.

Nicholas Hadjiyiannis, the chief executive officer of the bank, recapitalised with €1.7bn in 2014 and 2015, said he expects that next year — when an agreement with Spain’s non-performing loans specialist Altamira kicks in — will bring considerable changes in the administration of delinquent loans, including loan sales.

In the first nine-months of the year, the bank posted €63.3m in net losses compared to a net profit of €53.9m in the respective period last year.

The bank is currently working on its Cyprus Stock Exchange listing as part of its obligation to reduce the government’s stake from over 99 per cent to below 25 per cent with successive capital issues.

On September 1, it was reported that the Co-op was expected to reduce its non-performing loans stock by over €1bn by the end of the year.

Hadjiyiannis said the bank is resorting to pilot campaigns in cooperation with outside associates in an attempt to recover €1bn of unsecured terminated debt.

He added that bank has introduced “Qualco,” a new software adjusted to Cyprus’s legislation which will help manage the bank’s non-performing loans stock.

Share.

About Author

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

  • almostbroke

    Gee wizz , reduced to 6.5 billion and that’s supposed to make the taxpayer feel good .

  • Bob Ellis

    It has taken 4 years to get to this point. I’ve seen glaciers move faster.

  • Kevin Ingham

    I suspect that many of the delinquent borrowers are signing up for “loan restructuring” before the Spanish loans recovery company starts chasing them up a bit more tenaciously. Doesn’t mean to say the money is going to be paid back any time soon

    As for new “software” to help tackle the problem- what a joke. The problem needs proper insolvency laws,repossession legislation and courts that can wind zombie companies and non performing borrowers up in a mater of months, not years . Until that’s in place all we are actually seeing is some sort of silly game of financial pass the parcel

    Of course if that should ever happen then the banks balance sheets will take a massive hit as they wind up companies with no assets in them, repossess houses worth way less than amounts borrowed against them and take back worthless cars that were bought for Euro 10,000’s

    • Eye on Cyprus

      Excellent summary.

  • Gui Jun An

    Yea, sure, the Co-op is insolvent. And if the government manages to sell its stake to shareholders then the new PLc will soon call in the receivers. But will depositors savings be safe up to 100,000 euros. I bet not!

    • Pc

      It is not insolvent. If it would be, the ECB would close it immediately. And yes, depositor holdings up to €100,000 are secured under the depositor guarantee scheme. Even in 2013’s bail-in those holdings were secure. Stop scaring people with lies.

      • Kevin Ingham

        I would not be too sure about that..One month ago Mario Draghi stated there could be no deposit protection scheme if NPL’s are not reduced.

        This was primarily directed at the Italian banks, but given that the Cypriot banks have NPL rates 3 times higher than the Italian ones it goes without saying there could be problems with that “guarantee” if the worst comes to the worst

        • Pc

          First of all, the ECB is not in charge of the deposit protection scheme currently. So Draghi’s words have no immediate or direct impact on the current scheme. It is a national arrangement currently by each individual member state.

          Draghi’s statement should be seen in the light of proposals to dress up a European-wide protection scheme run by the ECB rather than the current national ones. And there he stated this because it would be difficult to persuade healthy, northern European banks to contribute to a scheme which would be mainly used by their weak southern European competitors.

          So far, the EU has always observed the protection schemes and even in the case of Cyprus’ bail-in it was explicitly honoured.

          • Kevin Ingham

            It is a national arrangement, so how is Cyprus going to underwrite it if the EU decides it has not done enough to reduce NPL’s ? (and let’s face it ,so far it has hardly done anything)

          • Pc

            They bailed out Greece 3 times. You really think they’ll let Cyprus slide? Furthermore, the Troika signed off Cyprus’ efforts on each review. So, how can they say now that Cyprus did not do enough when the Troika passed Cyprus every time?

            If push comes to shove, there will be another fudge and Cyprus will be helped. But it would only get to that point if the COOP would be on the verge of collapse. It is not.

          • Kevin Ingham

            As a lesson to Italy it would be perfect !! Germany is fed up of bailouts- that’s one of the reasons for their political problems.

            Cyprus failed to pass the foreclosure and repossession laws that would have enabled the banks to tackle their NPL’s and rather than sell offf the SGO’s they have chosen to flog passports instead. They got a bit of wriggle room, but the have failed to tackle their fundamental problems

            There are many in Germany pushing for a two tier Eurozone. The Coop bank is “solvent” only because the assets on it’s balance sheet remain way over valued. It will have to continue to increase it’s capital buffers and bad to debt provision for years to survive (the very same process that has led to Draghi warning the Italian banks )

            Would the Eurogroup or the ECB sacrifice little Cyprus as a warning to Italy- you better believe it

      • Jim

        Unfortunately, there is not enough money in the Cyprus deposit protection scheme to pay depositors a fraction that would be due if even one bank failed.

  • Mist

    Numbers are fine but, how many individuals/companies are we talking about?

  • alexander reutersward

    an excellent plan, write off the debt of family and friends completely and change it to a loss that the taxpayers pay for.

  • Eye on Cyprus

    Has the bank recovered €670m; or simply moved that sum from NPLs to some other identity?

    • Re-negotiated means performing