articles | 10 January 2017

Co-op loan restructuring gathers pace

Loan restructuring in the state-owned cooperative credit sector reached €1.25 billion in 2016, marking an increase of 20% year on year, reducing the NPL ratio to a historic 47% of the Co-op’s total loan book, the CCB Chief Executive Officer Nicholas Hadjiyiannis has said.

According to a circular issued by Hadjiyiannis to the CCB’s staff, obtained by the Cyprus News Agency (CNA,) non-performing loans (loans 90 days past due) declined by €800 million in 2016 marking a reduction of 12.2% year on year, whereas non performing exposures (delinquent bad loans according to the EBA’s more strict definition) declined in 2016 by €370 million or 4.9% year on year.

The increased momentum in loan restructuring pushed the NPL ratio 47% of the Co-ops total loan book which is a historic law following the 2013 financial crisis, the circular added.

The CCB liquidity exceeded €4 billion in 2016, while net deposit inflow in December 2015 was over €60 million, Hadjiyiannis said according to the circular.

New loans doubled in 2016 compared with 2015 reaching €250 million, with Hadjiyiannis pointing out that “much more effort is needed in 2017.”

However he added that “the Co-op sector in 2016 posted a CET1 capital ratio of over 16% making us the best capitalised bank compared to our main competitors.”

As CNA has learned the Co-op sector has set up the centralised early arrears call centre, which contributed to the reduced rate of new NPLs, whereas, the CCB has set up an asset management unit which will enable the Coops to manage any real estate acquired in the context of debt to asset swap.

So far assets acquired amount to €500 million from older debt to asset swap, while the CCB’s opts for a more prudent approach linked with risk-taking appetite.

Furthermore, speaking to CNA, Hadjiyiannis said 2017 will constitute another landmark year in the Coops’ history, as the CCB will seek to join the Cyprus Stock Exchange.

“Our aim is to bring the Co-op back to a broad domestic shareholder basis,” he said, adding that some share will be given to the staff.

The CCB in 2017, he went on to say, aims at fully deploying the strategic cooperation with Universal Life, to complete the merger of the eighteen cooperative credit institutions, improving the level of customer service, as well as further improve the loan restructuring with more radical and efficient solutions.

The Co-op sector was nationalised in 2014 as the state injected €1.67 billion to cover the CCB’s capital shortfall. 

Source: InCyprus

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