CEO John Hourican, hardly six months in the job but facing a mountain of obstacles in trying to revive the bank from its dire state, said that following his recent interview, there was no intervention in management issues by the chairman or the board of Directors, including the management and collection of non-performing loans, and media reports to the contrary were “completely unsubstantiated and categorically dismissed.”
Hourican added in a statement that, “the objective of the engagement of an external advisor is to assess the strategic options available to the Group regarding its corporate structure in order to support the investment case and value proposition.
The advisor will assess, among others, the progress of implementing the restructuring plan, analyse the funding and capital structure of the group, identify options that could accelerate the implementation of the restructuring plan in tandem with the further strengthening of the group and provide recommendations to the board.
“Any advisor’s recommendation is one of many tools the board will use to assess the implementation of the restructuring plan. Depending on this assessment, the Group would then and only then consider alternative options that may also require the approval of the relevant authorities.”
Hourican added that the restructuring plan was his team’s core ambition. “The board of directors fully supports the efforts of the executive management and I am confident in proceeding decisively with the restructuring plan and managing the current issues of the Group. The sole aim of our effort is to create a stronger and more focused institution capable to support the recovery of the Cyprus economy.”
Despite showing a regulatory capital level of core Tier 1 equity at 10.2% as of December 2013, Moody’s Investor Service said that “the weak domestic economic environment, high unemployment rates and on-going property price correction will lead to high problem loans and credit losses that will erode capital.”
The rating agency added that non-performing loans (NPLs) already increased to 53% of gross loans according to the bank's preliminary results for 2013, a worrying development that economists see may be eroding the bank’s liquidity, unless efforts are made to recover NPLs, mostly related to major property companies that have failed to repay their loans.
Source: Financial Mirror