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Cyprus banks must put an end to non-performing loans — Bank of Cyprus CEO

Panicos Nicolaou warns banks on management of NPLs.

Panicos Nicolaou, CEO of the Bank of Cyprus, the island’s largest lender, warned that banks here must put an end to non-performing loans remaining from previous crises, and to prevent new NPLS arising from economic distress in the COVID-19 crisis.”

“We should support reliable borrowers and depositors and not strategic defaulters and other ‘savvy’ persons who have learned to live at the expense of the others,” he said adding that maintaining a high standard of living cannot be achieved with unchecked borrowing or through calculated delinquency, so that some  maintain their lifestyle by exploiting slow procedures and the complex legal system.”

Noting that the Cypriot banks have repaired their balance sheets to a large extend, Nicolaou said private debt, consisting of corporate loans and loans to households amounted to €23.7 billion or 116 per cent of Cyprus’ GDP in the end of June 2020 compared with €48.5 billion or 250 per cent of GDP in December 2012.

Nicolau reiterated that Cypriot banks will support the economy and economic activity which has been severely hurt by the Covid-19 pandemic. He emphasised that the island’s banking sector is well-placed to support households and businesses through the current downturn.

“Compared with the 2013 crisis, the great difference this time around is that we began at a much better starting point both in terms of liquidity and capital adequacy, and these factors allow us to absorb the shock and to support economic recovery. Without banks there can be no healthy economy, low unemployment and recovery,” he insisted.
Addressing the Fourth Business Leaders Summit on Thursday, Nicolaou said that businesses and the state alike should prepare for future technological changes “which are coming faster than we anticipated.”

On the banking sector, Nicolaou acknowledged that the Cypriot banks are facing challenges mainly concerning low profitability due to reduced interest margins and high operating costs, problems that are common for all banks in the EU.

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