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BoC to discuss creation of development bank

President Nicos Anastasiades' meeting with the BoC board on Thursday

The Bank of Cyprus (BoC) board of directors will discuss setting up a separate entity to handle non performing loans, it emerged on Thursday.

The matter will be discussed on Thursday afternoon and Friday, BoC chairman Christis Hassapis said after a meeting with President Nicos Anastasiades.

“We are possibly talking about a development bank and not a bad bank,” he said. “The term bad bank is a bad term.”

Recent media reports suggested there was disagreement among board members over the matter.

Reports also claimed Hassapis was at odds with CEO John Hourican over the handling of non performing loans.

Hassapis denied the reports.

“The whole board is talking about a development bank; we are just discussing the best way to set it up,” the BoC chairman said. “There is no political pressure. For some strange reason the media constantly refer to political pressure. There is no political pressure and no clash with the bank’s CEO Mr. John Hourican.”

The lender has hired HSBC to advise it on the matter.

Hourican echoed Hassapis, saying no political pressure had been put on him as regards the management of NPLs.

He said the board was looking at its options and has not yet decided on what to do.

“But we are examining all options, as one would have expected us to do,” he said.

Government spokesman Nicos Christodoulides said it was up to the bank to decide.

“What should be made clear is that we should not speak about a ‘good’ and ‘bad’ bank,” he said.

BoC, Cyprus’ biggest lender, is struggling to find its feet after it seized customer deposits to recapitalise as part of the terms of the island’s international bailout.

It is now trying to deal with its ever increasing NPLs, which reached around 50 per cent at the end of last year.

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