PRESIDENT Anastasiades has offered his full support to the Bank of Cyprus CEO John Hourican saying that those who owe the financial institution money have no option but to pay.
The President made the statement when he was asked to comment on reports that the bank was putting increased pressure on thirty large borrowers, whose total non-performing loans exceed €6 billion, to pay. He also noted that no-one in Cyprus has the luxury to act as in the past and this needs to be hammered into the conscience of each and every resident of the island.
The President also referred to past errors, behaviours and inadequate supervision, all of which had contributed to the island’s financial situation as it stands today.
In closing, President Anastasiades said that he is ready and willing to adopt any measures that could improve the health of the Bank of Cyprus.
(In its second review of the Cyprus economic programme, the Troika noted that the Bank of Cyprus will:
“In the medium-term two separate units will be created, one for “normal” NPLs, and one “Special Projects Division” for the top 22 corporates and real estate developers. With a focused approach, it will be attempted that the NPLs of the top 22 corporates will either start performing again or that action may be taken to seize the collateral.”)
I hope I am wrong, but I think the developers are too smart to pay the banks back any monies they don’t want to.
This is potentially good news though to what cost to innocent buyers is yet to be established. We have heard recently of cases where buyers are being targeted by banks to pay towards the debts of their bankrupt developer. Having been exposed can this practice, whilst apparently not illegal, be allowed to continue?
A less painful cross to bear would be to lose one’s property to the bank and at least be able to walk away; but many thousands have been invested and this is not something everyone will want to or be able to consider.
We buyers are coping – or sadly not in many cases – and continue to pay our mortgages, pay our community fees; repair, decorate and furnish our properties – all the time wondering whether it will be ours in the end.
We need to at least know one way or the other so the sooner action can be decided upon and implemented the sooner we can deal with the consequences and get on with our lives. And if we have to accept that those consequences of our investing in Cyprus turn out to be unfavourable then so must the developers, (bankers, lawyers), accept the consequences of their duplicity in this mess and face up to their moral obligations!
So Mr. Hourican, Mr. Anastasiades, turn your tough words into tough action – NOW!
The Large borrowers of Non Performing Loans are the ones who got Cyprus into this situation. It is time for them to stand up and be counted and make arrangements to pay what they owe.
Most of the citizens of Cyprus are already doing their bit through the increase in Taxes.
This change of attitude by the Banks (well, Bank of Cyprus, anyway) was clearly flagged following the election of six Russians and John Hourican to the BoC board of directors back in September 2013 and then in a reconvened AGM on 29 November. Mr Hourican’s speech is on the BoC web site
Very relevant here is a paragraph on page 2
“SLIDE 3 – Immediate Priorities
Of course there remains a huge amount of work to do beyond this good progress to restore the bank to strength. Our immediate priorities are clear and everyone across the Group is clear on what they are:
We must tackle the very high level of arrears and non-performing loans. This can only be done through engaging directly and intensely with our customers and changing the way we operate.”
Now the Cyprus President has said he is willing to adopt any measures that could improve the health of the Bank of Cyprus. That says to me that BoC comes before a lot of other concerns regarding the property market.
So we have an idea now what is coming and it doesn’t necessarily involve everyone getting title deeds or Swiss Franc loans written off; what we need to focus on are the consequences. I see already that some expect the BoC to go after the personal assets of developers, but that will not happen unless there are criminal or civil charges laid and this would only help BoC.
The developers companies are limited companies as shown on all their agreements and letter headings. The directors may even be preferential creditors if their companies are wound up after they have lent personal assets to the company.
Well said Mr President, I just hope that the president and Mr Hourican start at the top and without fear or favour pursue the heads of these companies. I am sure that they can prevent any assets being sold or transferred abroad.
Al Capone was the most wanted in USA he went to jail for ironically, tax evasion and his assets were seized!!
Possibly the first sensible and meaningful statement from any recent president of the republic in regard to financial matters and entrenched psyche.
Carrying out the intent without harming innocent bystanders will perhaps be a different matter as the root causes of all the nations problems have not been addressed.
We can only hope that the moral and ethical route is taken to recover these vast sums but I fear those that owe it have no intention of paying up in the knowledge that much of what they do owe is attributed to and recoverable from innocent buyers, at least in Cypriot law.
Encouraging words – but take our developer. Who threw up all our houses out of snot and lolly-sticks – everything is now prematurely failing on them.
All of his staff have been sacked and he has allegedly taken up residence in a small heavily armoured office somewhere on the island.
Will they nail him before he finds a way to escape (both physically and fiscally)? I certainly hope so – but I’m not going to hold my breath just yet!
But consider for a moment Clive’s comment to the above related article entitled “NPLs of 22 developers highlighted by Troika”. It may not prove as easy as President Anastasiades thinks!
So what will happen to the innocent property buyers without their Title Deeds, who despite paying in full directly to these developers, are unwittingly caught up in this situation?
“The President also referred to past errors, behaviours and inadequate supervision, all of which had contributed to the island’s financial situation as it stands today.” Cure to Cyprus woes in here!
Lets take the cue form the humble production manager: First step is to realize where errors occurred, second is to make changes to ensure it does not happen again, and third, to mitigate the loses.
Congratulations to Mr President and best of luck to John Hourican. We all also have civic responsibilities not just personal profit margins.
“it will be attempted that the NPLs of the top 22 corporates will either start performing again or that action may be taken to seize the collateral.”
Sadly that could mean the homes of innocent buyers. The bank must seize all the personal assets of these developers first. LET THEM LOSE THEIR HOMES! Maybe this will encourage payment of NPLs.
How about changing the law so that small claims can also be easily filed against non payers of goods and services!
Sounds like a step in the right direction.
Let’s hope the clock is ticking using European timescales.