State-owned KEDIPES cash collections exceed €1 billion after three years of operation

Cash collections of the Cyprus Asset Management Company (KEDIPES) reached €95.2 million in the second quarter of 2021 with total cumulative cash collections since KEDIPES establishment in September 2018 exceeding €1 billion.

Assets under management (excluding interest capitalisation) declined to €6.33 billion in the Q2 2021 from €8.25 with total deleveraging amounting to €1.93 billion while KEDIPES repaid over €0.5 billion of the state aid amounting to €3.5 billion.

KEDIPES began operation in September 2018 to manage the non-performing assets of the former state-owned Cyprus Cooperative Bank, whose deposits and performing loans were sold to Hellenic Bank, Cyprus second-largest bank. The state had to support the transaction with €3.5 billion in bonds offered to Hellenic.

The state-owned asset manager launched a voluntary retirement scheme (VRS) aiming to reduce its personnel to 260 persons from the current 390, with KEDIPES President, Lambros Papadopoulos stating that in case the VRS does achieve its target of at least 100 retirements, redundancy is on the table.

The VRS launched οn September 30 until the end of October and employees are offered up to €180,000 in compensation.

“The plan is generous and fair and will be the only one, that is, there will be no change,” Papadopoulos told a press conference, stressing that redundancies plan is “not an end in itself.”

But he noted that trade unions were presented with the VRS provisions which were shaped according to KEDIPES mandate, the obligation to maximise profit for the taxpayer and the company’s target to complete its mandate by 2028.

Furthermore, Papadopoulos said that decisions concerning the transformation of KEDIPES into a system-wide asset manager is continuing with final decisions expected within 2022. The government is in consultation with the EU Directorate General for Competition to give green lite to KEDIPES to acquire an estimated €1 to €1.5 billion non-performing loans in the Cyprus banking system collateralised with primary residences.

“Our business plan provides for the repayment of the state aid (granted during the sale of CCB) and that is our target until decisions are taken,” Papadopoulos said.

Concerning the project “Ledra” featuring a sale of performing and restructured loans amounting to €565 million, Papadopoulos said that binding offers are expected to be submitted in the first half of November, adding that six investors, both from Cyprus and abroad, in the tender.

Cash collections in the second quarter of 2021 amounted to €95.2 million with cash collections while operating and asset management expenditure amounted to €28 million.

Loans declined to €6.58 billion in nominal value at the end of the second quarter from €6.63 in the previous quarter. Total deleveraging since September 2018 reached 10.7 per cent of the total loan portfolio in nominal terms and 25.4 per cent excluding interest capitalisation.

Total assets at the end of the second quarter amounted to a nominal €7,411 million including €167 million in cash €619 million in immovable property and €607 million of performing exposures.