Bank of Cyprus registers €1.94 billion losses

Bank of Cyprus registers €1.94 billion losses


Review Hari Stefanatos

In the first 9 months of 2013 the Bank of Cyprus registered a loss of €1.94 billion due to the increasing deterioration of its asset quality and non-performing loans that increased to 48%.

John Patric Hourican, the bank’s CEO, said “the continued deterioration in the performance of our loan book and the need for additional provisioning in the third quarter of 2013 has resulted in further losses”.

According to the Central Bank of Cyprus new directive, non-performing loans accounted for 48% of gross loans.

The agreed €10 billion bailout between Cyprus and Troika resulted in 47.5% seizing of the Bank of Cyprus uninsured deposits in order to recapitalize the bank, while at the same time Cyprus’s second larger lender, Cyprus Popular Bank, saw its good part (insured deposits and assets) absorbed by the Bank of Cyprus.

“Consumer confidence remains fragile. WE will have another difficult year as a country, we will have another difficult year as a sector and another difficult year as a bank,” said Hourican.

He also stressed the importance of an amendment in legislation that will eliminate the obstacles  to the seizure of collateral resulting in the provision of incentives to borrowers in repaying their loans. There is a prediction for such an amendment in January 2014 under the fiscal adjustment program that has been agreed with the Troika.

Hourican said “without the ability to seize the collateral our discussions with the borrowers are too weak. What I see in a need for change in legislation to ensure we have the teeth to act in the interest of the bank and therefore in the interest of the country”.

(Source CNA)