Government Spokesman Prodromos Prodromou has stressed the need for a solution to the problem of Non-Performing Loans ( NPLs) in Cyprus.
He was replying to questions on Sunday about the Opposition’s criticism over the way the government had handled the sale of the state-owned Cyprus Co-operative Bank (CCB) to Hellenic Bank.
The state was forced to buy the CCB in 2013 by injecting €1.8 billion. “The CCB’s losses were large”, said Prodromou, according to a Presidency of the Republic press release.
However, he added, the two banks are now joined in a formation that is strengthened by a €10 billion injection in deposits which are secured, contrary to rumours in recent weeks that CCB deposits are unsafe.
The state took on around €6 billion worth of non-performing loans, after it deposited €2.5 billion in CCB last month as the bank was facing a possible run on deposits following rumours about its viability.
Prodromou said the state will pass on all the NPLs it owns to a new body to be set up to deal with the non-performing loans owned by all banks.
He also said that the state will make an additional deposit of €1 billion to the CCB in exchange for performing loans worth €500 million and all of the Bank`s immovable property, worth €600 million.
After that, and together with a review of the legislation “we will be able to provide a solution to Non-Performing Loans, similar to the proposal of all political parties,” he added.