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Bank of Cyprus has so far restructured €5.247 bln of its problematic loans, from a total of €23.8 bln, with just over half of the portfolio being loans in arrears for more than 90 days and thus considered as non-performing (NPLs).
Evan Hamilton, head of the Restructuring and Recoveries division that was set up after the bank was first imposed a bail-in of unsecured deposits in March 2013, told a workshop that 66% of the restructured loans related to corporate and SME customers and 32% were in construction and real estate.
Hamilton added that any restructuring takes time and that major restructuring could take at least 12 months.
CEO John Hourican, addressing the workshop on “Learning from the crisis: The Bank of Cyprus re-engages with is Large Business Customers”, said there was a need to change the national agenda “from austerity to prosperity” and that a new long-term policy is required.
Analysing the new strategy towards big corporate clients, he said that the bank should have better access to their accounts and their business plans in order to make sure it can support viable clients. For small borrowers, he said the bank promises to review applications from 3 to 10 days.
“We can lend and we are willing to lend”, said Director of Corporate Banking Nicolas Sparsis, adding that new lending should support growth in promising sectors.
While the national loans-to-GDP ratio stood at 284% in 2014, property related lending stood at 46%, according to BOCY calculations. The construction sector’s leverage was 24%, while its value contribution was only 3%.
According to the audited results for 2014 released a few days ago, the bank’s gross loans and deposits were €23.8 bln and €13.2, bln respectively, with the net loans to deposits ratio improving to 141% from 148% at the end of the third quarter.
Loans in arrears for more than 90 days decreased by 3% during the fourth quarter of 2014 and totalled €12.65 bln or 53% of gross loans. The provision coverage ratio of 90+ DPD improved to 41% (compared to 38% at September 30, 2014), while taking into account tangible collateral at fair value, the 90+ DPD are fully covered, the bank said.
