12/09/2012 05:38
The restructuring plan of Cyprus Popular Bank includes three scenarios of capital support, estimating the minimum possible needs of the group close to €3.5 billion.
The plan, prepared in cooperation with KPMG, is currently under examination by the competent authorities.
According to sources collected by StockWatch, the main scenario provides that the Group will need capital of almost €3.5 billion.
The second scenario estimates a significant deterioration of the macroeconomic condition, raising the bar close to €4.5 billion.
The third is the extreme stress scenario, according to which capital needs are even greater.
Although capital needs are lager than Cypriot sizes, one of the main messages of the restructuring plan is that the state support of Cyprus Popular is a solution of lower cost than its non-support.
One of the key mechanisms included in the plan is the establishment of an asset management company.
This company will be transferred part of the loan portfolio, aiming to reduce total assets, and therefore the size of the support.
The company will manage the loans in Cyprus and Greece and the balance sheets from other countries.
The plan provides for the sale of subsidiaries at the right time and when conditions allow the maximization of the benefits for the major shareholder.
Based on the plan, the Group will be close to profitability in 2013 on condition that it will implement part of the plan for spending cuts.
At best, cuts will be made through salary cutbacks. The decree for state support provides for a reduction of payroll in Cyprus by 10% and has not yet been implemented.
The goal will be achieved with the early retirement of a number of employees and possibly the non payment of the 13th salary.
In order to cut operating expenses, efforts to shrink the branch network by 20 in Cyprus and 45 in Greece have been intensified.
The bank has already received support of €1.8 billion via the issue of bonds.
In the first half, it suffered losses of €1.3 billion most due to increased bad debts to €885 million and the amortization of goodwill of €560 million.
The competent authorities, already facing with some distrust the macroeconomic scenarios of the project, are expected to complete their examination soon, and after making the necessary changes to the draft, it will be sent for approval to the European Commission.
The aim is to adopt the plan by the end of 2012 to take effect from 2013.
The plan, prepared in cooperation with KPMG, is currently under examination by the competent authorities.
According to sources collected by StockWatch, the main scenario provides that the Group will need capital of almost €3.5 billion.
The second scenario estimates a significant deterioration of the macroeconomic condition, raising the bar close to €4.5 billion.
The third is the extreme stress scenario, according to which capital needs are even greater.
Although capital needs are lager than Cypriot sizes, one of the main messages of the restructuring plan is that the state support of Cyprus Popular is a solution of lower cost than its non-support.
One of the key mechanisms included in the plan is the establishment of an asset management company.
This company will be transferred part of the loan portfolio, aiming to reduce total assets, and therefore the size of the support.
The company will manage the loans in Cyprus and Greece and the balance sheets from other countries.
The plan provides for the sale of subsidiaries at the right time and when conditions allow the maximization of the benefits for the major shareholder.
Based on the plan, the Group will be close to profitability in 2013 on condition that it will implement part of the plan for spending cuts.
At best, cuts will be made through salary cutbacks. The decree for state support provides for a reduction of payroll in Cyprus by 10% and has not yet been implemented.
The goal will be achieved with the early retirement of a number of employees and possibly the non payment of the 13th salary.
In order to cut operating expenses, efforts to shrink the branch network by 20 in Cyprus and 45 in Greece have been intensified.
The bank has already received support of €1.8 billion via the issue of bonds.
In the first half, it suffered losses of €1.3 billion most due to increased bad debts to €885 million and the amortization of goodwill of €560 million.
The competent authorities, already facing with some distrust the macroeconomic scenarios of the project, are expected to complete their examination soon, and after making the necessary changes to the draft, it will be sent for approval to the European Commission.
The aim is to adopt the plan by the end of 2012 to take effect from 2013.
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