07/12/2015 10:09
Supervisors of Cypriot banks express their discontent as regards the way they are handling communication about the results of the European diagnostic controls.
Technocrats of the single supervisory mechanism (SSM) who have recently completed the assessment of the capital needs of the Bank of Cyprus, the Hellenic Bank, and last month, the Central Cooperative Bank, are sending a message of dissatisfaction to Frankfurt, in relation to the public criticism from the Bank of Cyprus and the Cooperative on the assumptions used.
For the first time in the Cypriot market, the two biggest banks have publicly expressed their disagreement with SSM estimates about the amount of provisions they need to include in their accounts.
As a result of increased provisions, the Cooperative needed state support while the Bank of Cyprus is expected to lose significant capital, moving close to the supervisory limit which is expected to come close to 12%.
The chairman of the Central Cooperative Bank Nicolas Hadjiyiannis speaking last week before the Finance Committee of the parliament said that the Cooperative strongly disagreed with the assumptions used by the SSM, which, as stated, are different from those used in the stress tests of November 2014.
In the stress tests of 2014 Cypriot banks had invoked the law on property foreclosures that was passed earlier by the parliament. The law was frozen after the stress tests, which annoyed the Europeans. It was put in force in April 2015, without any substantial effect on the rate at which the banks dispose of collateral securities that they hold for red loans.
This year's checks by the SSM assume that banks need several years to recover their assets because of the difficulty on foreclosing property.
On the basis of this year's controls of the new supervisors of SSM, a capital need occurred for the Cooperative of around €200 mn. as the CCB had to increase the coverage ratio for non-performing loans with provisions to 50%, by approximately €0,5 bn.
In its announcement on the occasion of the publication of the financial results for the nine months of 2015, BOCY questioned assumptions used by the ECB’s SSM under the supervisory review and evaluation of the Cypriot systemic banks.
The ECB estimates that BOCY has additional, provisions of €600 mn stemming mainly from the collectively assessed portfolio and must be recognized.
From the floor of the annual general meeting of BOCY shareholders the reappointed CEO of the bank John Hourican, also criticized the ECB.
These criticisms annoyed the ECB despite the fact that the government did not officially agreed with it, even though the state is the major shareholder (99%) of the Cooperative.
It is estimated that the Hellenic Bank may need to make additional provisions for €70 mn, which will also bring it close to the new supervisory capital threshold of 12%.
Technocrats of the single supervisory mechanism (SSM) who have recently completed the assessment of the capital needs of the Bank of Cyprus, the Hellenic Bank, and last month, the Central Cooperative Bank, are sending a message of dissatisfaction to Frankfurt, in relation to the public criticism from the Bank of Cyprus and the Cooperative on the assumptions used.
For the first time in the Cypriot market, the two biggest banks have publicly expressed their disagreement with SSM estimates about the amount of provisions they need to include in their accounts.
As a result of increased provisions, the Cooperative needed state support while the Bank of Cyprus is expected to lose significant capital, moving close to the supervisory limit which is expected to come close to 12%.
The chairman of the Central Cooperative Bank Nicolas Hadjiyiannis speaking last week before the Finance Committee of the parliament said that the Cooperative strongly disagreed with the assumptions used by the SSM, which, as stated, are different from those used in the stress tests of November 2014.
In the stress tests of 2014 Cypriot banks had invoked the law on property foreclosures that was passed earlier by the parliament. The law was frozen after the stress tests, which annoyed the Europeans. It was put in force in April 2015, without any substantial effect on the rate at which the banks dispose of collateral securities that they hold for red loans.
This year's checks by the SSM assume that banks need several years to recover their assets because of the difficulty on foreclosing property.
On the basis of this year's controls of the new supervisors of SSM, a capital need occurred for the Cooperative of around €200 mn. as the CCB had to increase the coverage ratio for non-performing loans with provisions to 50%, by approximately €0,5 bn.
In its announcement on the occasion of the publication of the financial results for the nine months of 2015, BOCY questioned assumptions used by the ECB’s SSM under the supervisory review and evaluation of the Cypriot systemic banks.
The ECB estimates that BOCY has additional, provisions of €600 mn stemming mainly from the collectively assessed portfolio and must be recognized.
From the floor of the annual general meeting of BOCY shareholders the reappointed CEO of the bank John Hourican, also criticized the ECB.
These criticisms annoyed the ECB despite the fact that the government did not officially agreed with it, even though the state is the major shareholder (99%) of the Cooperative.
It is estimated that the Hellenic Bank may need to make additional provisions for €70 mn, which will also bring it close to the new supervisory capital threshold of 12%.
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