BoC mulls selling €7bn in NPLs – reports

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By Stelios Orphanides

Bank of Cyprus, the island’s largest lender, is preparing to sell up to €7bn in non-performing loans and is setting up four subsidiaries to facilitate the process, Haravgi reported on Monday without citing its source.

The four companies will serve as vehicles for the sale of the affected loans to third parties and the bank has already requested the Central Bank of Cyprus’s green light, the Akel-affiliated newspaper reported on its website.

 

Bank of Cyprus, which pioneered the reduction of delinquent loans in the banking system by setting up as early as in 2013 a specialised recovery and restructuring division, reported a drop of its non-performing loans to €8.8bn in December or to 47 per cent of the total from €11bn or 55 per cent a year before. The bank is scheduled to announce its first quarter results on Tuesday, May 29.

Haravgi reported that the selection of the loans that will be transferred to the four companies is likely to be based on the type and size of the affected loans and the implementation of the bank’s plan may take into account the government’s plan to set up a company which will take over the government’s to-be-announced scheme to aid vulnerable groups unable to repay their mortgages, dubbed Estia.

According to this year’s stability programme, filed to the European Commission in April, the government aims at reducing non-performing loans in the banking system by around €8bn from currently around €22bn.

Bank of Cyprus did not respond immediately to a request for comment.

 

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

  • Kevin Ingham

    The template for reducing NPL’s is quite simple, however that goes flying out the window when you have astronomically high NPL levels and the prospect of abysmally low recovery rates.

    Those factors will create a very complex, hugely expensive and highly disruptive “solution” to the problem

  • almostbroke

    Why are they ‘mulling ‘? If they don’t get the bad debts off their books they will soon sink without trace !

    • Kevin Ingham

      If they sell that level of NPL’s for the going rate they will also sink.They need to get government or EU support to enable their balance sheet to take such a hit.

      At the moment I suspect such support would be illegal under EU rules

      • almostbroke

        Government or E U it’s the taxpayer s money that will be ‘ponied up’

  • Jim

    Probably worth a fair market value of around 5 Euros, given all the legal hoops & hurdles the buyer will have to comply with.

  • SuzieQ

    But will the four companies be restricted to avoiding repossessing primary residences AND the developers who owe millions? If so, they’re not going to recover very much.

    • Cydee

      Mmm I’m just wondering if we could ask to see the criteria for being in the ‘vulnerable’ group…

      • SuzieQ

        That depends on who you know!

  • Douglas

    BOC is preparing to sell up to €7bn in non-performing loans and is setting up four subsidiaries to facilitate the process,but whoever buys the bad debt will be aware that Government legislation is in process to protect many people involved in NPLs,so they will be operating with one hand tied behind their back.