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Unions ‘the only stone not upturned’, Hellenic Bank CEO tells Economist Conference

November 4, 2018 at 10:43am

After tackling non-performing loans, the volume of which he believes will go down very fast in the next year, unions “is the only stone not upturned”, Hellenic Bank’s CEO Yiannis Matsis told the 14th Economist Conference, on Friday.

“The Unions is the only stone not upturned,” he said, predicting that it will be the next matter to be tackled.

Matsis said that banks should focus on being meritocratic organisations, should have transparent policies, flexibility and digitisation, the shift from manual to digital banking. Together with the unions we will have to resolve the matter, he added.

After the crisis of 2013, he said all stakeholders got together to try and get out of the crisis, adding that the effort “has been a huge success.”

The banking supervision which  was dreadful and  corporate governance have improved and keep on improving Matsis said giving the example that now 52% of members of banking boards of directors have international experience as opposed to 5% previously.
He also said that the Hellenic Bank closed 50,000 high risk accounts in the last year and that the banking sector has deleveraged greatly to 280% of GDP down from 640% of GDP.

In the last two months the banking sector has seen 9 billion NPLs move away from the banking sector he said. The banking sector now has €11 billion in NPLs and “I predict it will go down very fast in the next year,” he added.  Referring in particular to the purchase by Hellenic Bank of the good part of the Cyprus Cooperative sector he said that the bank’s portfolio increased from €7 to €17 billion, up by 2.5 times making the Hellenic Bank the first retail bank of the island and that it achieved €130 million of cost synergies, annually. The bank, he added, also reduced its NPLs down to 25% from 50%.

Demetra Kalogirou, Chairwoman of the Cyprus Securities and Exchange Commission (CYSEC) referred to the momentum registered in the island’s securities market.

As she noted, “over the last few years we have seen 69% investment funds under CYSEC supervision.”

Today we regulate 172 alternative investment funds, UCITS and their management companies compared to only 100 in 2016, she added

“Given the diversity in the securities market, we have a considerable amount of interest from local and foreign entrepreneurs and investors to set up businesses in Cyprus for the provision of financial services. Indicatively we have 103 applications for new entities which are currently examination,” she said.

Isfaddyar Zamman Khan, a World Bank financial sector specialist said Cyprus’ NPL rate is still very high and described the problem as a “perpetual disease”.

He underlined that tackling NPLs is a fully coordinated job” by all stakeholders and referred to the problems associated with NPL resolution.

Henry MacNevin, associate managing director of Moody’s investor service pointed out that despite progress, Cyprus continues to register “a high burden of NPLs.”

“This remains a very high level. They are improving but still a lot needs to be done. We expect this improvement to continue,” he said, pointing out that this is reflected to the agency’s positive outlook of the banking system.

MacNevin pointed out the ESTIA scheme, a programme utilising government subsidy to non-performing home-owners “risks creating moral hazard”.

He added, the banking system is expected to return to profit in 2018.

“The system is moving in the right direction, NPL remain at high levels and process will remain a long one. Bank and all stake holders will need to maintain focus on the problem,” he concluded.

Vice Chairman of the Board of Directors of the Cyprus Investment Fund Association (CIFA) and in charge of fund services at PwC Cyprus Andreas Yiasemides outlined the advantages of Cyprus as an investment destination.

He referred in particular to the sectors where potential investors can invest in Cyprus such as tourism, real estate, shipping, energy, education and health. At the same time Yiasemides pointed out that the number of investment funds has doubled in Cyprus in the last five years while asset management has tripled.

(Cyprus News Agency)