Lambros Papadopoulos, President of the state-owned asset management company, KEDIPES, warned on Tuesday that the continued suspension of foreclosures will negatively affect the company’s revenue from non-performing loans (NPLs) management resulting in a reduced repayment of state-aid.
The Parliament has voted in favour of extending the suspension of foreclosures for NPLs collateralized by primary residences up to €350,000, NPLs collateralized by premises of small enterprises with a turnover of 750,000 annually and NPLS collateralized by agricultural plots up to €100,000.
Speaking in press conference, Papadopoulos said that new extension affects loans amounting to approximately €2.9 billion which corresponds to 50% of KEDIPES’ loan portfolio.
“Due to these continued interventions, cash inflow will be reduced, negatively affecting the capacity to repay the state aid,” Papadopoulos added.
KEDIPES was established in September 2018 as the residual entity of the former Cyprus Cooperative Bank (CCB), whose performing assets and deposits were sold to Hellenic Bank. The Cypriot government provided state aid amounting to €3.5 billion to facilitate the transaction. KEDIPES’ mandate is to manage the non-performing assets of CCB with a view to repaying the state aid.
Papadopoulos said a continued suspension of foreclosures for primary residencies would be manageable, but added the new extension has a multiplying effect on KEDIPES’ portfolio as small enterprises and agricultural plots were included.
“For us foreclosures is a tool but not an end in itself, initiating a foreclosure procedure enables us to find solutions especially for strategic defaulters,” he said.
According to the asset management results, cash inflow amounted to €93.1 million in the third quarter of 2022, down by 19.2% compared to the previous quarter and 3.5% year on year. The quarterly reduction is attributed to the sale of KEDIPES’ stake in commercial activities in the second quarter, KEDIPES said.
Total deleveraging since the commencement of KEDIPES operation in September 2018 amounted to €2.83 billion, while total debt write-offs in the context of loan restructurings amounted to €1.28 billion.
Loans in nominal value at the end of September 2022 amounted to €6.24 billion from €6.34 billion in the end of the previous quarter and €6.51 in the third quarter of last year.
KEDIPES’ total assets in the end of the third quarter of 2022 amounted to €6.96 billion in nominal value, including €121 million in cash €582 million in real estate and performing loans amounting to €631 million.
In 2022 KEDIPES has paid €230 million to the state, with the total state repayment since September 2018 reaching €800 million in cash, while KEDIPES has transferred buildings to the state amounting to €140 million. Papadopoulos said that KEDIPES is expecting to pay the state with an additional amount between €60 to €80 million.