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Millions owed by big names

A committee of inquiry has heard how unsecured loans were granted to some big names in the property development sector following pressure from high ranking executives in the Bank of Cyprus.

A COMMITTEE of inquiry investigating how the country’s banking system came to near collapse, yesterday asked the Bank of Cyprus (BoC) to confirm press reports on a number of problematic loans the bank had handed out between 2006 and 2011.

Eraclis Eracleous, with the BoC’s credit risk management department, was asked to list a series of problematic loans, most of which were unsecured. Some of the loans were readily handed to property developers without real caps up until 2008, when the sector overheated, he said.

Eracleous told the inquiry that although some loan applications would originally get rejected, they would eventually be given following pressure from high ranking bank members. He was not asked to clarify, although he said that loans pertaining to executives or interested parties needed to be approved by the board.

Aristo Developers which had a loan portfolio of €24.54 million in 2006 when its owner Theodore Aristodemou was a board member, ended up amassing €198.59 million by 2011, Eracleous said.

There was no estimate as to whether the debt was recoverable. Eracleous said. Aristodemou was elected BoC chairman in 2008, and had a stake in Dolphin Capital Atlantis Ltd which bough Aristo’s full stake at the time. He later bought back majority stake in Aristo, now a private company.

D. Michael Constructions ended up amassing some €10.5 million in debt with the BoC by 2011, from €1.47 million in 2006.

The Libra group, dealing with real estate and hotels and run by majority shareholder businessman Andreas Drakos, owed the BoC some €16.96 million in 2006 and increased its debt to €114 million in 2011, Eracleous said.

Louis Group owed the bank €31 million in 2006, but increased its debt portfolio to €114.41 million by 2011.

A company connected with former chairman of Omonia football club, Miltiades Neophytou increased its debt from €5 million in 2006 to €14.95 million. Neophytou used a substantial part of his debt to finance his football club, the inquiry heard.

Hassapis Land Developers raised their loan portfolio to €130.07 million by 2011, from some €5.6 million in 2006.

PrimeTel’s “high risk” debt stood at €35.74 million in 2011, Eracleous said.

S.Z. Eliades amassed €38.93 million in 2011 from €1.8 million in 2005, while SFS group held €80.68 in debt with the bank in 2011, from €48.87 in 2006.

Hadjiyiannis hotels in Famagusta has €31.18 million debt, which is potentially unrecoverable.

Quality Group amassed a €73.59 million debt in 2011, from €7.03 million.

Millions owed by big names in property development

Readers' comments

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  • kufrahdog says:

    It is all very well reporting on these debts as they were in 2011, but what is the status of these debts now, ie July 2013? Key questions: What action has the BoC taken to recover these debts? Have they resulted in court orders (memos) being placed on the borrowers? What legal sanctions will be imposed on the BoC executives who authorized the loans? What relief can be given to the innocents caught up in this disgraceful way of ‘doing business’? One could go on. One thing is clear: The business and political elite and those who hold economic power in the Republic of Cyprus are tainted by association.

  • Mike says:

    And so it goes on, and on, and on, and on. The most surprising thing about these revelations is that anybody is surprised. It will continue ad nauseam or until hell freezes over in one form or another. But woe betide any general member of the public owing the bank or developer €100 or so.

  • rod chamberlain says:

    I’m sure they will come after our unsecured debt’s.

  • andrew says:

    I amassed a debt of 2,120 Euros, ok… plus 45 cents… does this mean I do not have to pay the money back?? please advise!

  • Martyn says:

    QUEL Surprise! Many of these guys/organisations seem to have been on a jolly-old Jolly for quite some time before almost everything hit the Buffers last year. Some of the BoC numbers are simply mind-boggling – and, hey ‘most of the loans were unsecured’ and ‘approved by the bank board’. So likely many, most? of these will get written off? At least now we are getting names of individuals and organisations who enjoyed these generous loans. But, wait, this is BoC, what about Laiki?

  • andyp says:

    Hence why many “homeowners” are now potentially in the toilet through unpaid developer debts.

    Maybe Sophocles Michaelides will sort it all out for everyone suffering or shortly to suffer solely due to the reckless lending and could not give a monkeys attitude of BOC and it’s former directors.

    They should all stand trial in a criminal court.

    But hey this……

  • Pippa says:

    And what are the banks going to do to ensure the debts are paid back? Oh I forgot this is Cyprus therefore nothing will happen!

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