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CBC calls directly supervised banks not to pay dividends amid COVID19 turmoil

LoveCyprus — Wed, 08 Apr 2020 12:12:48 +0000

The Central Bank of Cyprus (CBC) with a new recommendation published today calls on directly supervised banks or less significant credit institutions not to pay dividends until October 11, 2020, amid the crisis caused by the coronavirus pandemic.

The new recommendation echoes the recommendation issued by the European Central Bank to large eurozone banks directly under its supervision.

The CBC recommends to Cypriot smaller banks to refrain from distributing any dividend, to refrain from issuing any irrevocable commitment to distribute dividend in 2019 and 2020 and not to commit to any share buy backs aiming at remunerating shareholders.

Furthermore, the CBC stresses than “any less significant institution that fails to comply with this recommendation will be called on to provide explanation to the CBC.”

“The CBC considers that credit institutions should be in position to continue their role to fund households, small business and corporations amid the coronavirus pandemic and the adverse impact this has created. For this reason, it is necessary the credit institutions to preserve their capital base to support the real economy in this current extremely uncertain environment,” the CBC stressed, highlighting that “the preservation of capital base to support the economy and absorb potential losses is considered by the CBC as this highest priority over any possible dividend distributions and share buy-backs.”

Source: CNA

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CBC calls on Αsset Management Companies to promote loan repayment suspensions

LoveCyprus — Wed, 08 Apr 2020 12:08:24 +0000

The Central Bank of Cyprus called on Credit Acquiring Companies (CACs) to promote moratorium on loan repayments, as part of the measures to alleviate the adverse impact of the coronavirus pandemic.

In a circular published today signed by the CBC Deputy Director of Supervision, the CBC notified CACs of the decree issued by the Ministry of Finance providing for a nine-month loan repayment suspension for borrowers with no arrears exceeding 30 days in end-February 2020.

The CBC, the circular noted, expects from CACs to contribute to the effort to enable the recovery of viable and cooperative borrowers in a smooth economic activity the soonest possible.

“Therefore, you are called on collaboration with the borrowers and observing the provisions of the Arrears Management Directive to proceed with viable restructurings with no time-consuming procedures, providing viable borrowers to face this unprecedented period,” the CBC added.

The CBC also suggested that the CACs refrained from imposing additional charges in the restructuring process and in their arrears management strategy, CACS should take into account the particular financial conditions facing the majority of borrowers.

CACs are mainly non-performing loans management agencies. There are seven CACs licensed by the CBC managing more than €9 billion of non-performing loans with the state-owned Cyprus Asset Management Company (KEDIPES), the former Cyprus Cooperative Bank being the largest with around €7 billion of loans under management.

Source: CNA

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Central Bank circular instructs banks not to compound interest during loan repayment moratorium

LoveCyprus — Mon, 06 Apr 2020 11:45:51 +0000

A general implementation on loan repayments will not be considered as restructuring and the banks are not to assess a possible loss in the net present value of loans falling under the moratorium, Central Bank of Cyprus said in a circular to Cyprus credit institutions.

The new circular, issued following new guidelines by the European Banking Authority (EBA) concerning the classification of loans falling under the repayment moratoria, constitutes a green light for the banks not to compound interest during loan repayment suspension.

The CBC said that the past days it had received clarifications directly both by the EBA and the Single Supervisory Mechanism on important issues concerning the prudential handling of general moratoria.

Last week the Cyprus parliament approved a law on extraordinary measures in the financial sector while Finance Minister issued a decree calling on banks to implement a nine-month loan repayment moratorium as part of the measures to alleviate the impact due to the coronavirus pandemic.

“The implementation of general moratoria does not constitute a restructuring. Therefore, credit institutions are not advised to assess the possibility of a reduction in the net present value of the credit facilities falling within of general moratoria for reasons of recognising new defaults,” the Central Bank said.

It adds that a recognition of a possible loss during the moratorium period is excluded from the regulations concerning the recognition of defaults.

Source: CNA

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Bad loans in the Cyprus banking system at €9.42 billion in November 2019

LoveCyprus — Mon, 30 Mar 2020 05:58:23 +0000

Non-performing exposures in the Cyprus banking system amounted to €9,418 million in November 2019 recording an NPE rate of 28.5% of total loans, data released today by the Central Bank of Cyprus (CBC) show.

According to the CBC, total NPEs (according to the EBA definition) marked a reduction of €60 million compared with October 2019 and €841 million compared with the respective month of 2018.

Total loans recorded as 90 days past due, which shows the flow of new NPLS, also marked a reduction of €11 million compared with the previous month and amount to €7,827 million or 23.7% of total loans, the CBC added.

Restructured loans in November 2019 amounted to €5.69 billion, of which €4.17 billion were restructured facilities that continue to be classified as NPL, as per EBA definition.

According to the CBC, total accumulated provisions amounted to €5.13 billion or in end-November, with provisions associated with NPEs amounting to €5.0 billion.

Corporate loans in end-November totalled €14.87 billion, of which €4.19 or 28.3% were classified as non-performing, while total household loans amounted to €13.4 billion oF which €4.86 billion or 36% were classified as NPEs, the CBC added.

Source: CNA

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Liquidity in the Cyprus banking system at €15 billion in February

LoveCyprus — Fri, 27 Mar 2020 08:50:35 +0000

Total deposits in the Cypriot banking system in February marked a net reduction of €117 million, while loans rose by a net €8 billion, according to data released today by the Central Bank of Cyprus.

The outstanding amount of deposits in February reached €48.4 billion with total loans amounting to €33.6 billion, leading to total liquidity of around €15 billion.

According to the CBC, total deposits in February 2020 recorded a net decrease of €117.2 million, compared with a net decrease of €311,9 million in January 2020.

The annual growth rate reached 1,5%, compared with 2,0% in January 2020. The outstanding amount of deposits reached €48,4 billion in February 2020, it said.

Total loans in February 2020 exhibited a net increase of €8.0 million, compared with a net decrease of €119.2 million in January 2020. The annual growth rate stood at -4,9%, remaining unchanged compared with January 2020.

The outstanding amount of total loans reached €33,6 billion in February 2020, the CBC added.

Source: CNA

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Central Bank to finalise additional measures for COVID-19

LoveCyprus — Wed, 18 Mar 2020 07:15:53 +0000

Constantinos Herodotou, Governor of the Central Bank of Cyprus, pointed out the need for the banks to transmit the capital relief measures decided by the ECB to the real economy which is feeling the pressure from the coronavirus pandemic.

Herodotou held a teleconference with the executive chiefs of the Cypriot commercial banks and the Association of Cyprus Banks yesterday, to who he outlined the timeframe for the implementation of further measures being examined by the CBC.

These measures are additional to the €1.3 billion capital relief that emerged for the Cypriot systemic banks following the announcement of the Single Supervisory Mechanism.

Sources told CNA that the CBC is considering measures within its mandate and measures which require approval by the SSM. The measures are expected to be submitted within this week.

The banks are believed to agree that these measures should be transmitted to the real economy, businesses and households which faces pressures from the coronavirus pandemic.

Furthermore, the Central Bank Governor is in contacts with the SSM with regard to the measures falling under its competencies.

As CNA learned, the CBC seeks to obtain the SSM’s approval so that the flexible stance shown to borrowers by Cypriot banks will not affect their non-performing loans ratio.

The CBC therefore awaits the SSM’s response to take its decisions.

Source:CNA

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