By George Telaveris
As lenders in Cyprus join forces with European giants in what seems to be a final attempt to tackle non-performing loans (NPLs), and with hedge funds waiting around the corner for their turn to buy any available loan on sale, clients that defaulted on their loans are getting nervous.
On Wednesday, the Cypriot movement against property seizures protested Cyprus Cooperative Bank’s (CCB) merger with Spain’s Altamira Asset Management on the grounds that the lender will become much more aggressive on foreclosures and less willing to compromise, giving debt defaulters less time, among other possible measures.
“We want to know why this agreement was made with Altamira,” said Evgenia Moiseos, who is a representative of the ‘Movement Against Foreclosures’.
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Speaking on state radio, Moiseos said: “We will demand a freezing of this agreement until they disclose the exact details of this merger and we will also demand from the state that they do whatever it takes to ensure that first homes are protected.”
Earlier this month, the state-owned CCB said that a joint unit with Altamira would be set up and which would see 51% owned by the Spanish financial corporation and 49% by the bank.
“Their instinct is right. CCB will become more aggressive towards its clients and probably more efficient,” a person who is in a position to know told the Cyprus Weekly.
Despite the pain that the Altamira-managed unit will bring to some clients through foreclosures, other clients could benefit.
“The market needs lenders well capitalised and willing to increase their provisions in order to have the space for generous compromise with their clients on bad loans,” the same person said.
Every euro that will be collected from bad debts, either through their repayment or through a sale to investors, is expected to turn into capital or provisions on NPLs.
“It’s the only way to make sure that the money of depositors and investors in the CCB will be saved,” an official within the CCB said under the condition of anonymity.
The CCB was the only bank that was bailed-out by international lenders during the 2013 financial crises with a total of €1.7 billion.
Bank of Cyprus has chosen to create REMU, its own company to manage NPLs and real estate assets, while Hellenic Bank has set up a joint venture with APS.
“As long as the CCB is under the state it will be vulnerable to political pressure,” the same person said.
According to CCB officials, the lender will list its shares on the Cyprus Stock Exchange before the end of the year.