Company says that 49 per cent of 2018 state aid now repaid

State-owned asset management company Kedipes recorded net cash inflows of €114.3 million in the fourth quarter of 2024, chairman Lambros Papadopoulos announced on Wednesday.

He also described the preliminary agreement with Hellenic Bank to terminate the Loan Guarantee Scheme and repurchase a portfolio of non-performing exposures as “a significant development for Kedipes”.

Presenting the fourth quarter 2024 results and preliminary data for the first quarter of 2025, Papadopoulos said that the Q4 inflows were “satisfactory and within the framework of Kedipes’ business plan.”

He mentioned that performance was expected to recover over the remainder of 2025, following traditionally lower first-quarter returns, which stood at €72 million.

According to Kedipes’ press release, Q4 2024 cash inflows increased by 26.4 per cent compared with the third quarter.

Total inflows for the entire year reached €460.4 million.

Loan solutions during the fourth quarter amounted to €232 million, with 87 per cent comprising restructurings (€57 million) and other consensual arrangements.

Cumulative cash inflows from the beginning of Kedipes’ operations on September 1, 2018, through to March 31, 2025, totalled €2.63 billion.

Overall deleveraging, excluding contractual loan interest, exceeds 46 per cent.

Kedipes’ financial management director, Lambros Papalambrianou, emphasised the importance of cash flows as the key indicator of Kedipes’ performance.

“Through these flows, we cover the costs of managing the assets and ultimately ensure the repayment of the state aid,” he explained.

For 2024, cash flows increased by €460 million, bringing the total to €2.56 billion, with these revenues achieved through approximately 45 per cent deleveraging of the assets under management.

From that total, €1.47 billion has already been used for repaying the state aid, corresponding to 57 per cent of the total aid.

Papalambrianou stated that the current repayment rate stands at 65 to 70 per cent of revenue.

With the addition of €40 million repaid in Q1 2025, total repayments now stand at €1.51 billion.

Including the €100 million reserve for the “Rent for Installment” scheme and €130 million in properties committed for transfer to the state, the total contribution toward state aid repayment rises to €1.74 billion—49 per cent of the assistance granted in 2018.

The €310 million in cash repayments made during 2024 were supplemented by the Q1 2025 payment, which Papadopoulos confirmed was lower due to the agreement with Hellenic Bank.

The latest payment of €40 million was made on March 26, 2025.

Papadopoulos reaffirmed the total cash repayment of €1.51 billion and the €100 million reserve for the “Rent for Installment” scheme, which Kedipes is tasked with implementing.

He said all pending applications—totalling 2,568—are expected to be evaluated by the end of 2025.

To date, 282 approval letters have been sent, including 102 following a 2025 amendment to the law waiving final approval certificates for properties under the scheme.

Regarding support for performing borrowers, Papadopoulos confirmed that the Interest Subsidy Scheme, launched in early 2023, supported 3,200 loan accounts in 2024 with total subsidies of €12.8 million.

“We announce today that Kedipes’ board of directors has decided the Interest Subsidy Scheme will continue for the first half of 2025, in the same format as 2023–2024, offering interest rates of 3.50 per cent for housing loans and 4 per cent for other types of credit,” he said.

Papalamprianou also presented the results of loan resolutions managed through doValue Cyprus Ltd, amounting to €4.6 billion.

These include restructurings, property-for-debt swaps, repayments, and to a lesser extent, recoveries from foreclosures.

Real estate recoveries from foreclosures reached €313 million, while successful foreclosures added another €60 million.

The total value of auctioned properties so far is around €1 billion, although the success rate remains relatively low.

He stressed that “the main focus is always on finding consensual solutions with borrowers.”

Only 8 per cent of recoveries stem from foreclosures, with 92 per cent resulting from consensual arrangements.

Key agreement with Hellenic Bank

Papadopoulos highlighted the preliminary agreement with Hellenic Bank as “the most important and positive development”.

He pointed out that it will end the Loan Guarantee Scheme, trigger the repurchase of a portfolio of non-performing loans, and terminate all obligations related to the 2018 Asset Transfer Agreement.

He explained that upon completion of the deal, all guarantees provided by Kedipes, Sedipes, and the Republic of Cyprus to Hellenic Bank in 2018 will be terminated.

The agreement includes a repurchase of NPLs with a contractual value of €361 million for €180.2 million.

These loans primarily consist of retail banking exposures secured by €553 million in first mortgages.

Kedipes will also pay €17.5 million for the termination of the scheme and €10 million for the settlement of other obligations under the 2018 agreement.

Final agreements are expected to be signed in June 2025 and require approvals from the Finance Ministry, the European Commission, and supervisory authorities.

Completion is anticipated by the end of 2025.

Papadopoulos said the need for the agreement stemmed from a desire to eliminate uncertainties.

“The objective was to control and minimise the cash outflows that would arise from these agreements, as we operate in a particularly demanding and uncertain geopolitical environment,” he said.

He also stressed that the Loan Guarantee Scheme still had five years left to run, while the asset transfer agreement and related indemnity guarantees were open-ended and had led to claims and legal actions by Hellenic Bank.

“We felt that, as Kedipes, we needed to look at the bigger picture—not just the short-term but also the long-term—so we could implement our business plan and avoid potential future obligations and claims,” he said.

He also noted that negotiations began approximately fifteen months ago.

Papadopoulos described the agreement as “a very positive and significant development for Kedipes”.

He explained that it will reduce credit and liquidity risk while halving the potential cost of the guarantee scheme from the 2018 estimated €155 million baseline.

He added that the €27.5 million in payments under the agreement fully align with Kedipes’ business plan and that the long-term impact on results and cash flows is expected to be positive, despite a temporary slowdown in state aid repayments.

Moreover, he said the loan repurchase from Hellenic Bank would allow Kedipes to recover part of the €102.7 million it had already paid under the scheme.

Ledra II loan portfolio sale underway

In response to a question about selling more portfolios of performing loans, Kedipes CEO Marios Papadopoulos confirmed that the process for selling the “Ledra II” portfolio is already in progress.

On his end, Lambros Papadopoulos added that final offers are expected next week.

The portfolio is valued at around €85 million and includes mostly loans under the Estia scheme.

“There is significant interest in the portfolio, mainly from Cypriot commercial banks,” he said.

On current challenges, Papadopoulos pointed to the execution of the company’s business plan, which includes the full repayment of the €3.54 billion in state aid by the end of 2030.