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Government stresses need to solve problem of NPLs

Government Spokesman Prodromos Prodromou stressed the need for a solution to the problem of Non-Performing Loans in Cyprus on Sunday.

He was replying to questions about criticism by opposition parties for the way the government handled the sale of state-owned Cyprus Cooperative Bank (CCB) to Hellenic Bank.

The state was forced to buy the CCB in 2012 by injecting 1.8 billion euros and further intervened when in 2013 the CCB had 300 million euros negative working capital. “The CCB’s losses were large,” Prodromou said.

However, he added, the two banks have now joined in a formation that is strengthened by a 10 bn euro injection in deposits which are secured, contrary to rumours surrounding the CCB in the last weeks that deposits are unsafe.

The state has already taken on around 6-billion-euro worth of non-performing loans, after it deposited 2.5 billion euros in CCB last month as the bank was facing a possible run on deposits following rumours about its viability.

Prodromou said the state will pass on all non-performing loans it owns to a new body to be set up to deal with the non-performing loans owned by all banks.

He also said that the state will make an additional deposit of 1 billion euros to the CCB in exchange for performing loans worth 500 million euros and all of the Bank`s immovable property, worth 600 million euros.

After that, and together with a review of the legislation “we will be able to provide a solution to Non-Performing Loans, similar to the proposal of all political parties,” he added.

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