B2Kapital to remove up to €2bn in NPLs from banking system

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By Stelios Orphanides

B2Kapital Cyprus Ltd, the first company licensed to buy loans, aims at helping affected borrowers get rid of the stigma of not repaying their loans via consensual solutions, its chief executive said.

Rakis Christoforou, B2Kapital’s managing director, said that the strategy of the company, which in January agreed to buy €145m of non-performing loans from Hellenic Bank, provides for acquiring unsecured non-performing retail and corporate loans and avoid housing loans.

“We aim at acquiring €1bn or €2bn in non-performing loans,” Rakis Christoforou said in an interview on Monday, four days after the bank supervisor granted the subsidiary of Norway’s B2Holding Group its licence. “This translates into an injection of equity into the economy.”

The licence under the law on the sale of loans passed as part of Cyprus’s bailout terms will allow the company to complete a deal announced with Hellenic Bank in January that provides for the acquisition of €145m of delinquent loans.

The deal is expected to enter into force in early June and will signal the beginning of the company’s actual operations, Christoforou said without revealing additional details. The company is about to hire new staff that will complete negotiations with affected borrowers and is already in talks with other banks over the acquisition of part of their non-performing loans portfolio.

Non-performing loans in the Cypriot banking system, a remnant of the twin fiscal and banking crisis of 2013, account for €22bn, or almost half of the total, and pose a significant risk for financial stability and the economy’s fragile recovery. The finance ministry said in its Stability Programme submitted to the European Commission last month that the government aims at reducing non-performing loans in the banking system by roughly €8bn by the end of the year.

Christoforou said that there are two types of borrowers with non-performing loans; those who fell victim to the circumstances and while they were willing to honour their debts they are unable to complete restructuring negotiations with their respective bank and those who are uncooperative.

While B2Kapital is ready to show flexibility to the former, it is not ready to do so with strategic defaulters. “It would be unfair to get the same treatment as those who are willing to pay their loan,” he said and added that he was confident that consensual solutions can be reached in every case.

“Cypriots don’t like to be stigmatised as welshers,” he said. “We can offer them a chance for a new beginning.”

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About Author

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

  • Jim

    One of the main problems about collecting debt in Cyprus is, the government make lots of noise regarding reducing the debt, but put up all sorts of barriers that frustrate the collection of the debt.
    This probably due in part, that a number of the debtors are high up in government, or are relatives, or friends of them.
    Good luck to this debt collection company in their collection attempts. They may find it frustrating.

    • Kevin Ingham

      It all of course depends on what he banks sell the debt for and what the recovery percentage will be- and no one has told us the former or knows the latter.

      I remember an old Marx Brothers movie (“At The Circus” I believe) when $10,000 was stolen and that threatened the future of the circus.

      Asked the best way to get the $10,000 back Groucho suggested they offer a $20,000 reward

  • Bystander

    What would be their debt collecting practices?

    • Cydee

      Hopefully – harsh.

  • Eye on Cyprus

    That first sentence is a work of art. (Produced by piss artists.)

  • Didier Ouzaid

    “While B2Kapital is ready to show flexibility to the former, it is not ready to do so with strategic defaulters.”

    And what are they gonna do, exactly? Send ‘messengers’ to them? The legal frameworks basically allows them to dodge their obligations. Changing the counter-party wont change that.

    • Cydee

      Does B2Kapitol know about latest pre-2014 laws that protect these cockroaches?

      • Kevin Ingham

        I imagine so which will be reflected in the price of the debt.

        If they offer 10 cents in the Euro and recover 20 cents they are quids in. The banks will clear their balance sheets and comply with the rules, but somewhere along the line ordinary customers or tax payers are going to be stiffed with the 90% shortfall

  • Mist

    Job Vacancy………………..apply to the MD if your name is Crusher, Knuckles. Masher or Tiny.

  • Wanderer

    “Cypriots don’t like to be stigmatised as welshers,” he said. —- Is it really so? I’ve got the impression that e.g. sucking off the taxpayer tit under any and all pretense it pretty widespread. Starting from the prevalent desire to “work” for the state to sucking off of the taxpayer tit under every and any possible pretense, to faking some sort of disability or concealing the fact that one is working and claiming unemployment hand outs and such at the same time. There are plenty of Cypriots who are decent people but what I have described above is alarmingly widespread nonetheless.

  • Amazing to me that the borrowers are being so unfairly insulted. Loans are long-term debt that relies on the economy being strong into the short, medium and long-term future. It’s well known that the state and the banks made horrendous mistakes between 2007 and 2013, crushing the economy and financial system. These mistakes also crushed the ability of borrowers to repay in the future because the recession was deep. It’s positive that measures are being taken to buy up loans and help borrowers, but let’s not blame them, the situation was far from normal and the same terms like ‘welsher’ can’t be applied. The strategic defaulters must get in line and negotiate fair repayment solutions but your average borrower should be respected. The banks are also being held accountable for high interest rates during the recession, let’s be fair here.