20/01/2015 10:36
The Central Bank of Cyprus tabled to the parliament on Tuesday revealing details about the size of the problem in the balance sheets of the Cypriot banks.
The data show that there is a gap of almost €15 billion regarding the collaterals for loans of €60 billion in the system.
Specifically, speaking to the House Institution Committee, which examines the revaluation of properties for loan restructuring purposes, CB Governor, Chrystalla Georghadji revealed that loans of €14.8 billion are not covered by collaterals.
The largest part concerns the non-performing loans and the rest, loans that are serviced.
Specifically, the gap as regarding collaterals for non-performing loans amounts to €9.8 billion, much of which concerns large companies (€4.7 bn.). Another €4 billion concern loans given to individuals mainly for consumer purposes and to a lesser extent (€890 m.) loans for housing purposes. Approximately €1.1 billion concerns exposure on loans to small-medium companies of the retail sector.
Regarding the performing loans, the exposure is €5 billion. The largest part belongs to the large companies again (€2.3bn), €0.5 billion for housing purposes and €928 million for consumer loans. In the SMEs, the exposure is €430 million.
The Governor reassured the MPs today that banks have made provisions sufficient to cover the gap.
"We are slightly relieved from the fact that the provisions made by the banks in regard to non-performing loans, cover the amount for which there is no collateral”, she noted.
Based on the data, the provisions made by the banks were of €10.8 billion in relation to non-performing loans of €29.2 billion in the system.
The coverage of NPLs with provisions amounts to 37% and compares negatively with the 50%, which according to the IMF, applies to banking systems of other countries.
According to Ms. Georghadji, 25% of the loans have no collateral and making provisions is a prudent policy.
She also said that it is wrong to believe that revaluations are made only for loan restructurings and emphasized that the provisions of the banks were taken into consideration in the stress test.
She suggested that it should not be deduced that because of the provisions made and the fact that 25% of the loans have no collateral, the way of repayment is with the guarantees.
The CB Governor said that the provisions of the banks in the stress test were larger, stressing that the stress tests did not value collaterals which was an argument used by the Cypriot side.
She also said that no specific value was given to the aspect of collateral, noting that the provision is not a loss, but a prudent policy.
To the pressing questions of the MPs for the personal guarantees, Mrs. Georghadji noted that there is no possibility to give percentages for personal guarantees and this will only be known with the foreclosures.
On behalf of the CB, supervisory director Yiangos Demetriou noted that the provisions of Pimco are based on the same data included in the CB table and that the haircut was made for the capital needs of the banks.
On behalf of the banking association, it was stated that revaluations are made where necessary.
It was reported that for commercial premises revaluations are made every year and for residential premises every three years.
The data show that there is a gap of almost €15 billion regarding the collaterals for loans of €60 billion in the system.
Specifically, speaking to the House Institution Committee, which examines the revaluation of properties for loan restructuring purposes, CB Governor, Chrystalla Georghadji revealed that loans of €14.8 billion are not covered by collaterals.
The largest part concerns the non-performing loans and the rest, loans that are serviced.
Specifically, the gap as regarding collaterals for non-performing loans amounts to €9.8 billion, much of which concerns large companies (€4.7 bn.). Another €4 billion concern loans given to individuals mainly for consumer purposes and to a lesser extent (€890 m.) loans for housing purposes. Approximately €1.1 billion concerns exposure on loans to small-medium companies of the retail sector.
Regarding the performing loans, the exposure is €5 billion. The largest part belongs to the large companies again (€2.3bn), €0.5 billion for housing purposes and €928 million for consumer loans. In the SMEs, the exposure is €430 million.
The Governor reassured the MPs today that banks have made provisions sufficient to cover the gap.
"We are slightly relieved from the fact that the provisions made by the banks in regard to non-performing loans, cover the amount for which there is no collateral”, she noted.
Based on the data, the provisions made by the banks were of €10.8 billion in relation to non-performing loans of €29.2 billion in the system.
The coverage of NPLs with provisions amounts to 37% and compares negatively with the 50%, which according to the IMF, applies to banking systems of other countries.
According to Ms. Georghadji, 25% of the loans have no collateral and making provisions is a prudent policy.
She also said that it is wrong to believe that revaluations are made only for loan restructurings and emphasized that the provisions of the banks were taken into consideration in the stress test.
She suggested that it should not be deduced that because of the provisions made and the fact that 25% of the loans have no collateral, the way of repayment is with the guarantees.
The CB Governor said that the provisions of the banks in the stress test were larger, stressing that the stress tests did not value collaterals which was an argument used by the Cypriot side.
She also said that no specific value was given to the aspect of collateral, noting that the provision is not a loss, but a prudent policy.
To the pressing questions of the MPs for the personal guarantees, Mrs. Georghadji noted that there is no possibility to give percentages for personal guarantees and this will only be known with the foreclosures.
On behalf of the CB, supervisory director Yiangos Demetriou noted that the provisions of Pimco are based on the same data included in the CB table and that the haircut was made for the capital needs of the banks.
On behalf of the banking association, it was stated that revaluations are made where necessary.
It was reported that for commercial premises revaluations are made every year and for residential premises every three years.
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