Cyprus Mail
Business Cyprus

Hellenic boss wants to see Irish-type ‘bad bank’

Hellenic Bank's chairwoman Irena Georgiadou

By Elias Hazou

HELLENIC Bank is in favour of establishing companies specialising in managing bad loans, its chairwoman Irena Georgiadou told businessmen yesterday.

Tackling the massive non-performing loans (NPLs) in Cyprus may require establishing special-purpose vehicles, perhaps along the lines of Ireland’s NAMA, Georgiadou said during a meeting with the Federation of Employers and Industrialists (OEV).

NAMA (National Asset Management Agency) was created by the government of Ireland in late 2009. It functions as a bad bank, acquiring property development loans from Irish banks in return for government bonds, with a view to improving the availability of credit in the Irish economy.

“If we wish to take decisive steps forward, we must create those mechanisms…and give banks the tools to drastically decrease their NPLs.

“Having 50 per cent or 60 per cent NPLs in the banking system is unprecedented globally, and it’s not a healthy phenomenon,” said Georgiadou.

Describing Hellenic’s balance sheet as “robust,” she noted that the bank’s net loans accounted for just 51 per cent of its deposits.

“This means that for every €100 deposit in the bank we have given out in net loans the €51, and the remaining €49 is cash held mainly with the European Central Bank and the Central Bank of Cyprus.”

According to Georgiadou, currently Hellenic’ capital adequacy – its core tier 1 ratio stands at 13.5 per cent, well above the 8 per cent requirement.

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