As Bank of Cyprus prepares for its London listing, the island’s reunification would be an opportunity for the lender to gain new customers and reclaim practically written-off assets, CEO John Hourican said.
A possible reunification “represents another 500,000 people for us to be able to bank and we don’t bank any of them today,” the Irish banker, who heads Cyprus’s largest bank said in an interview to Bloomberg TV on Thursday. “There are 800,000 people in the south of Cyprus and 500,000 in the north, the economics are fundamentally different, the politics, depending on the day you discuss them, look good or less good”.
“There is definitely an opportunity,” he said with respect to the economics of reunification. “The bank has a number of properties in the north, which are in our balance sheet at zero (and) there is a possibility that that represents some value. So, there are a lot of good things, there are a lot of dangers but we will approach it positively.”
Hourican’s comments were made just days before President Nicos Anastasiades and Turkish Cypriot leader Mustafa Akinci hold talks in Switzerland to finalise the territorial chapter considered of key importance for a settlement.
Hourican said that while the bank’s non-performing loan problem remained “eye-washingly high,” even following the repair over the past quarters, the lender has “good plans and the momentum is good.”
On Tuesday, the bank said its overall NPLs fell to €11.9bn in the third quarter of the year, from €14.2bn the previous year, and almost €15bn in December 2014 when the current methodology was first applied. In September, the NPL ratio was 57.8 per cent of total loans compared to 62 per cent in September 2015, and 63 per cent in December 2014.
Banking sources estimate that the cure ratio of loans restructured since the beginning of 2015 exceeds 75 per cent.
Hourican said that the bank will remain focused on its NPL after it sold or shut “most of the really existential threats to the bank,” including its units in Russia, Ukraine, and Serbia, which he described as adventures in places the bank should not have got into in the first place as they only justified “managerial tourism”.
With its outstanding emergency liquidity assistance from the European Central Bank having been reduced to €0.8bn, the liability side of Bank of Cyprus’s balance sheet “is looking good,” he said.
Hourican reiterated the bank’s intention to “disassociate with Greece” by delisting from the Athens Stock Exchange after it was forced to shed its branch network in the country almost four years ago. “I don’t believe there is a business future in the medium term in Greece for us,” he said even as Cyprus and Greece remain culturally and linguistically related. “But the law in Cyprus is much more common with Britain(‘s). The business practices are more Anglo-Saxon than are Greek”.