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Helix 2 NPE sale delayed due to COVID-19

17/03/2020 08:32

Bank of Cyprus announced that its scheduled non-performing loans sale, called Helix 2, may take longer than anticipated due to the market disruption caused by the coronavirus (COVID-19) pandemic, adding the group will recognize additional provisions of €75 million in its Q4 2019 financial results.

“Against the backdrop of market volatility arising out of the COVID-19 pandemic, the Group continues to work with its advisers towards the sale of a portfolio of NPEs. Due to prevailing market and operational conditions, this process may take longer than originally anticipated,” Bank of Cyprus said in statement.

The NPL trade, amounting to 2.8 billion, expected to finalise in the first half of 2020, was the bank’s major transaction aiming at significantly reducing risks in Bank of Cyprus’ balance sheet. The Bank’s NPL rate amounted to 31% of its gross loans.

The Bank also added that “in the context of expected credit losses under IFRS 9, the Bank expects to recognise additional provisions of c.€75 mn on the Group`s 4Q2019 financial results, with a negative capital impact of c.45 bps,” adding that upon n completion of an NPE trade, the Group`s capital ratios would benefit from the reduction of risk weighted assets  reduction, subject to regulatory approval.

Furthermore, the bank said it continues to operate with significant surplus liquidity of €3.0 bn as at 30 September 2019.

The Group`s CET1 ratio and Total capital ratio as at 30 September 2019 stood at 14.9% and 17.9% respectively, both pro forma for the disposal of the investment in CNP and the voluntary staff exit plan that was completed in 4Q2019, well above regulatory requirements, the statement added.