articles | 30 January 2017

Coops steps to manage bad loans in 2017

The Cooperative Central Bank leaves the possibility of establishing its own platform for managing non-performing loans open, making it clear at the same time that such a scenario will be put in place only under specific circumstances and provided its viability is ensured.

In statements to the press, Cooperative Central Bank’s CEO Nicholas Hadjiyiannis said that the cooperative sector now keeps an open strategy on dealing with arrears payments including the possibility of establishing such a platform, highlighting at the same time that this will be on the basis of the key position held by the cooperative sector, which focuses on the people, staff and borrowers alike.

“Our strategy, which was prepared 16 months ago, included precisely this capability, since it is a practice which has been successfully implemented in countries of the European south, particularly in Spain,” he said.

The Hellenic Bank was recently the first Cypriot bank to sign a deal with APS Holdings, establishing a company which will manage its NPL’s portfolio of €2.4 billion.

“As the cooperative sector, due to our position in the market and the know – how we have developed, we have the capacity, when it is considered the right move for our policy and our strategy, to implement such cooperation on our own,” Hadjiyiannis added.

He stressed however that “we must be particularly methodical and careful since it would be a very important strategy decision, needing prior consultation with all involved actors, directly or indirectly, in the cooperative sector.”

According to Hadjiyiannis, it is important that the size of the loans portfolio which could be co-managed and the infrastructure developed in this area attracts the interest of large European organisations, looking to enter the Cypriot market.

At the same time, he noted, someone needs to look to these loans’ full management cycle in order to achieve their substantial reduction, something which is understood by the cooperative sector.

It is clear, he said that if a decision is taken to establish a NPL’s management company the cooperative sector will aim to cooperate with a large organisation, which will have the necessary experience and know – how in retail banking and in managing a high volume of NPL’s.

Hadjiyiannis also said that in the last year and a half, cooperative sector’s officers have visited and held contacts with banks abroad, as well as other organisations, mainly in southeastern Europe, who faced similar challenges, in an effort to exchange know – how and experience in dealing with bad loans.

“Our market placement, but also the know – how of the cooperative sector makes the possibility of such a cooperation substantial and attractive,” he points out, adding that “we know exactly what takes place, what the parameters are and what the benefits.”.

According to Hadjiyiannis people constitute an important parameter for the cooperative sector, whether they be customers or staff. “Our customer will remain our customer and our worker will remain our worker”, he said, adding that “our steadfast goal is to create prospect both for our clients and our staff.”

At the same time the Central Cooperative Bank’s General Manager also said that the arrears management directorate is entering a new phase since after having completed restructurings of the order of €2.5 billion, the process now has to do with the “hard core of NPLs.”

The directorate will evolve aiming to “increase our operational efficiency and the restructuring rate which according to experience so far come to 1,000 per month,” he said.

It will deal with arrears in a comprehensive manner allowing for the use of new methods and practices, he explained.

Source: InCyprus

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