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Cyprus President approved the plan of the country's largest commercial bank

Cyprus President approved the plan of the country's largest commercial bank

02.09.2015
Tags: Anastasiadis, Banking, Debt, Economy

The President of the Republic of Cyprus Nikos Anastasiadis supported rigid program of the new leadership in the process of restructuring of the Bank of Cyprus to seize ownership of companies that do not return their loans.

"Anyone who owes money, is obliged to return them," - said today the head of state in response to a journalist's question, whether he agrees with the actions of the bank, which announced measures for the return of millions of euros in assets and property of debtors.

Bank of Cyprus, he said, - private credit institutions, and the government has no right to interfere. However, if it "will appeal to the government for assistance, the state will always be on the side of the largest bank on the island," said Anastasiadis. The president explained that the Bank of Cyprus is a system for the country's economy. It largely depends on the stabilization of the financial sector, which is indispensable to the economic recovery, stressed Anastasiadis.

According to local media reports, about 30 large companies owe the Bank of Cyprus about 6 billion euros. Last month, the bank's management reported the establishment of a special unit, whose task will be to sell the property and asset management clients who are unable to repay the loans. The other day, the Bank of Cyprus appointed administrator of Libra Holidays Group, has been unable to service its debt in the amount of about 200 million euros.

The Bank of Cyprus fell into the center of a deep financial crisis, which forced the government of the republic in March last year to agree to the stringent requirements of the Eurogroup on the conditions for the allocation of a loan to the country in the amount of 10 billion euros in order to avoid default. In exchange, the Cypriot authorities undertook to conduct an unprecedented "haircut" of uninsured deposits in the two leading banks and use these funds to recapitalize the Bank of Cyprus. This process was completed last summer. As a result, 47,5% of deposits of large investors were subjected to "haircut". These funds were exchanged for shares, thanks to which new shareholders came to power in the bank, who elected a new board of directors. Currently, it includes 5 representatives of Russia.

Non-performing loans are one of the main problems facing the country's banking system and, above all, the Bank of Cyprus. According to the experts, they reach almost 50% of total loans.

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