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Thursday 16th July 2020
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The fly in the ointment

arrogant developerTHE arrogance of some developers and the apathy of bankers seem to have no boundaries.

During a recent meeting of big developers, all those present were crowing about how they still had the banks eating out of their hands and giving them the red carpet treatment and how there was no way the banks will chase them for their non-performing loans. They seem to regard themselves as untouchable and indeed they have probably been encouraged in this view by the banks’ timidity in pursuing the NPLs.

It’s no wonder, then, that the Bank of Cyprus and the Co-op banks are in such dire straits. But will the Troika ever act to force the banks to go for repossession and liquidation? If they don’t, then by this time next year it will probably be Liquidity Crisis II for BoC. Is not a ‘fire sale’ clearance of liquidated unsold property stock preferable to failing to grasp the NPL nettle?

We’re pretty sure that the first major recovery action against one of the big developers will suddenly see a miraculous coughing up of unpaid bank debts by the other ‘poor’ developers. Those that won’t; or can’t, should go to the wall.

Secondly, the same developers at this meeting were also cock-a-hoop about their next mega project -Varosha’s return to the Republic by the Turks and a new-build bonanza in Famagusta when foreign buyers will come flooding in once again.

There are three flies in this ointment:

  • Varosha’s return is pure speculation and, even if it does happen, may still be some way off.
  • Who would be in a position to finance the developers for this? Certainly not the banks in the Republic In their foreseeable circumstances. It is unlikely that developers here would want to borrow from Turkish banks. And would foreign banks really be daft enough to fund a bunch of developers with such an appalling track record of incompetence, lack of integrity and NPLs?
  • Why on earth would any foreign buyers who for years have been confronted with all the horror stories on the Cyprus Property Scandal on the Internet, TV and newspapers ever give any new Cyprus prospect more than a second’s glance?

It’s high time banks took action

With the Registrar of Companies recently reporting that one in four construction firms in Cyprus are close to bankruptcy, it’s high time banks took action against the so-called ‘troubled’ developers who have locked up the land’s money supply simply because they are stubborn enough not to want to pay any of the money back.

Perhaps parliament should go ahead and name-and-shame all those who have enjoyed privileged loans from the banks, some of which were for personal use and vast amounts were written off, whereas small clients are forced to cough up cash they don’t have for a four-or five-digit amount that the banks was to recover.


  1. The new CEO of Bank of Cyprus, John Hourican, nailed his colours to the mast in his speech to shareholders at the AGM last autumn, promising that everyone in the bank knew what they had to do and a large part of it was addressing and rectifying the non-performing loans. Half of the year is past and maybe he and his Russian colleagues on the board are finding out now just how things are done, or rather not done, in Cyprus.

    In six months time, Mr Hourican will have to report back to shareholders and to those depositors who suffered the haircut on their funds on how the problems with NPLs have been fixed, so I am expecting fireworks in the next few months. If they don’t happen, then it will be time to remember that Mr Hourican had to resign in 2013 from the Royal Bank of Scotland investment arm, because he failed to stop the LIBOR rate-fixing fiddles there.

  2. Banks don’t have any money.

    Money is raised from their customers and shareholders.

    When banks make their own money they can ‘give it away’ until then they have a responsibility to those who invest with them.

    Among those responsibilities are openness and transparency. Another is professionalism to treat their customers (all of them) with respect. Further to ensure the rules of banking are upheld including those that apply to NPL.

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