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Intervention causes discontent

17/11/2015 10:10
The need for banks to focus on large debtors, to accelerate loan restructurings and apply a ‘haircut’ on vulnerable borrowers’ loans is the triptych expected to be discussed between president Anastasiades and bank administrations during their meeting regarding how to deal with non-performing loans.

The meeting with the bankers will take place on Thursday while today, the president is expected to see the governor of the Central Bank Chrystalla Georghadji.

The president’s intervention to banks has already begun to cause reactions from both the opposition and the bankers themselves.

Bankers argue that the communication handling of the issue by the presidency rekindles borrowers’ expectations for a ‘haircut’ on their loans.

Those expectations, they note, may cause a new cycle of delays in loan repayments.

AKEL refers to posteriori expediency moves and the Citizens' Alliance speaks of communicative games. DIKO makes reference to the need for submitting concrete proposals.

The presidency believes that banks, despite the strengthening of their toolbox as regards dealing with non-performing loans, have not yet risen to the occasion.

The government focuses on the big problem of NPLs, to large borrowers who still remain untouched, as a close partner of the president said.

The presidency notes that the president’s initiative is expressed in the wake of passing a legislation on the sale of loans, which reinforces, banks’ ‘arsenal’ as stressed, to deal with non-performing loans.

NPLs currently amount to € 27 bn reflecting the difficult road the banks have to follow towards the consolidation of their balance sheets.

Mrs. Georghadji, as a senior source of the Central Bank told StockWatch, will bring information on the three largest Cypriot banks’ performance before the President today, namely BOCY, the Hellenic Bank and the Cooperative relating to their loan restructurings so far.

The CB thinks that restructurings have begun, even late, to bear fruit and calls on the stabilization recorded in recent months.

The CB notes that there has been a significant number of restructurings and if the percentage of NPLs remains high, it is due to the definition of non-performing loans. Troika in its latest evaluation acknowledges that the pace of restructurings has accelerated.

At the end of December, objectives set by the CB to banks regarding restructurings are expected to be reviewed.

The data obtained will be published again.

Troika reiterated yesterday that the decline in NPLs is a priority. It has identified positive elements in the bill for the sale of loans and stressed that the assessment of Cyprus will take into account the complete version of the law and the implementation of regulations.