Cyprus Mail

More needed to deal with NPLs, banks told

Hellenic Bank CEO Bert Pijls (left) and Cooperative chairman Nicolas Hadjiyiannis after the meeting (Photo: Christos Theodorides)

By George Psyllides

PROGRESS has been achieved in tackling the non performing loan problem plaguing the island, but more had to be done, banks and the government agreed on Thursday.

Bank brass met with President Nicos Anastasiades who stressed that the rate of loan restructuring must increase.

NPLs reached around 50 per cent of the banks’ portfolio, or €27.4bn. Banks have so far restructured around half, or €14bn.

Government spokesman Nicos Christodoulides said the president made it clear that efforts must focus on three levels: helping vulnerable groups, achieving viable restructures, but also applying the tools at the lenders’ disposal when it comes to those who can but refuse to pay their loans.

Christodoulides said progress had been achieved but the president’s message was clear: “an effort must be made to boost the rate of restructuring further.”

“In the same clear manner the president stressed that all the tools put in place in the past few months should be utilised for those who intentionally fail to respond to their obligations despite having the ability to do so,” Christodoulides said.

Outgoing Bank of Cyprus CEO John Hourican said the lender has restructured over 10,500 loans in 2015, 75 per cent of which continued to be serviced.

Hourican said “it was a difficult and pressing task” when NPLs were between 50 and 60 per cent of a country’s loan portfolio.

“We are making good progress but the problem is so large that progress appears small,” he said.

Hourican, who has criticised MPs for making things harder for banks by diluting the foreclosures legislation that was supposed to help in dealing with the problem, said they needed society on their side.

“If people start meeting their obligations NPLs will decrease,” he said.

He added that the lender was not interested at this stage to sell household loans.

Hellenic Bank CEO Bert Pijls said they had restructured some 40 per cent of their NPLs and discussions were ongoing over another 20 per cent.

Solutions could not be found for some 20 per cent and Hellenic planned to go through the legal avenues, Pijls said.

“Restructures have been our first priority for quite some time and unfortunately they will continue to be the first priority for a long time to come,” he said.

Pijls said Hellenic was now doing three times the restructures it was doing at the start of the year, noting that foreclosures and the insolvency framework started to yield results.

The Dutch banker said the sale of loans was an important tool that helped Spain and Ireland tackle their NPL problem. It was not among Hellenic’s priorities to sell housing loans, he said, but recognised that for some cases it would be the best solution for all involved.

Pijls said the bank would take into account a case of a primary residence that the family could not repay because they were unemployed.

But if one lived in a house worth €1.5m maybe it would be best to move to a place of half that value so that the loan was repaid, he said.

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