- Cyprus Property News Magazine - http://www.news.cyprus-property-buyers.com -

Millions owed by big names

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