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Banks and borrowers wait for developments

June 25, 2019 at 7:33am
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The restructuring process of Non-Performing Loans in Cyprus appears to be stagnant as it has been sidelined by other developments in the banking sector.

This is what recently-released data by the Central Bank of Cyprus seems to indicate.

Specifically, data for December 2018 and January and February 2019 show that NPLs are ‘stuck’ at €10 billion.  In addition, loans with an over 90-day delay have recorded an increase and this is something that causes concern, according to insiders.

A series of developments are behind the freezing of the restructuring process, including the sale of Bank of Cyprus’ Helix portfolio of bad loans to Apollo. As well as the late in its implementation ‘Estia’ scheme which, according to the Finance Minister, will be launched next month.

At the same time, Alpha Bank is in the process of appointing an external manager for its bad loan portfolio which is as high as €4 billion. Altamira will most probably be the one, according to informed sources.

And Bank of Cyprus is almost ready for Helix 2 which is the codename for its second such ambitious transaction aiming towards the reduction of the NPLs portfolio from the balance sheet. Its successful implementation will reduce the percentage of red loans to less than 10% of the total.

The market is also expecting Hellenic Bank’s package of non-performing loans to go on sale with informed sources saying the lender, which absorbed collapsed Cyprus Co-op Bank last year, aims to reduce the percentage of red loans to less than 10% of the total.

This is a move which is favoured by prevailing conditions in the Bank since it has recently increased its capital and high profitability seems to be around the corner.

At the same time, borrowers seem to also stall restructuring procedures because of a number of draft bills pending in parliament aiming to slow down the process of auctioning.

 

Read more:

Cyprus records the largest decrease on non-performing loans in EU, EBA says