Need for as­set man­age­ment units for banks to re­cover

Financial Mirror (Cyprus) - - FRONT PAGE -

The Chair­woman of Hel­lenic Bank has called for the cre­ation of as­set man­age­ment ve­hi­cles or com­pa­nies so that banks can prop­erly deal with the vast prob­lem of non­per­form­ing loans and the glut in the prop­erty mar­ket.

Ad­dress­ing the bank’s 41st AGM, Irena Ge­or­giadou told share­hold­ers “our pri­or­i­ties in­clude the ef­fec­tive man­age­ment of NPLs and re­spon­si­ble growth,” with CEO Bert Pi­jls adding that the aim is to turn the cri­sis into an op­por­tu­nity for growth.

Ge­or­giadou noted that 2014 was a year which posed great chal­lenges and pre­sented many changes and big op­por­tu­ni­ties. As re­gards the econ­omy, she em­pha­sised the sig­nif­i­cance of im­ple­ment­ing im­por­tant re­forms which will as­sist in at­tract­ing new in­vest­ment.

Ge­or­giadou em­pha­sised the role that, through re­spon­si­ble mon­e­tary and credit trans­ac­tions, the bank­ing sys­tem is called upon to play in or­der to achieve sus­tain­able growth. She de­scribed non-per­form­ing loans as the great­est chal­lenge faced by the coun­try’s fi­nan­cial sys­tem as a whole and pointed out that their cor­rect and suc­cess­ful man­age­ment re­quires spe­cialised knowl­edge. In this con­text, she high­lighted the need to swiftly cre­ate the cir­cum­stances which will al­low the estab­lish­ment and op­er­a­tion of ‘as­set man­age­ment ve­hi­cles or com­pa­nies’.

Ac­cord­ing to re­ports, the gov­ern­ment is al­ready pon­der­ing set­ting up a ‘bad bank’ that will un­der­take the trou­bled mort­gages, prob­a­bly un­der the aus­pices of the ex­ist­ing Hous­ing Fi­nance Cor­po­ra­tion, a state-owned lender geared at as­sist­ing low-in­come first time buy­ers.

Ex­press­ing the Hel­lenic Bank’s de­ter­mi­na­tion to en­ter into a tra­jec­tory of steady growth, Ge­or­giadou re­ferred to the Group’s strate­gic tar­gets for 2015 which in­clude the ef­fec­tive man­age­ment of NPLs and the growth of mar­ket share.

CEO Bert Pi­jls said par­lia­ment’s rat­i­fi­ca­tion of the law on fore­clo­sures and the in­sol­vency frame­work was “a step in the right di­rec­tion.

How­ever, the leg­isla­tive frame­work must be strength­ened in such a way so as to al­low loan sales where this is deemed un­avoid­able, a prac­tice which is ad­hered to by all Euro­pean coun­tries.”

As re­gards the man­age­ment of NPLs, Pi­jls said that ef­forts are fo­cus­ing on re­al­is­ing vi­able re­struc­tur­ings with vi­able so­lu­tions.

He also re­ferred to four sig­nif­i­cant fig­ures which in­di­cate the past months’ pos­i­tive de­vel­op­ments and the mo­men­tum gained by the Hel­lenic Bank Group. Th­ese in­clude a cap­i­tal ad­e­quacy rate of 17.9%, a net loans to de­posits ra­tio of 49%, some 30,000 new cus­tomers and 119 new hir­ings, with the work­force now at about 1,400.

Pi­jls also re­ferred to Hel­lenic Bank’s new hous­ing in­ter­est rate – which is the low­est in the mar­ket – as well as the debt con­sol­i­da­tion scheme for in­di­vid­u­als.

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