2020 Cyprus Country Report

Banking
Sector Profile
tions. In 2019, it acquired the operations and staff
of USB Bank for €40 million, followed by another
agreement to acquire 100% of the National Bank
of Greece’s Cyprus subsidiary. These deals were
financed by AstroBank’s own resources and supported
by a capital increase primarily from its
existing shareholders. The Bank kept up the takeover
momentum in 2020, by reaching an acquisition
agreement to purchase the banking business
of the Arab Jordan Investment Bank (AJIB)
in Cyprus. However, the deal was terminated in
August 2020 citing challenges brought by the coronavirus
pandemic, with the two parties continuing
to support the market independently.
DEBT MANAGEMENT BUSINESS
A key development in Cyprus changing the
banking landscape – and the real estate sector in
the long term – has been the entry of debt acquiring
companies (DACs) that have bought assetbacked
NPLs worth €14 billion from Cyprus
banks. There are currently seven licensed DACs
according to the CBC.
The Norwegian B2 Holding Group signed an
agreement with the Bank of Cyprus to acquire
a portfolio of non-performing loans, with a
face value of €400 million, consisting of consumer
and small business loans without collateral.
This is the group’s second deal in Cyprus,
following B2 Kapital Cyprus, a subsidiary of
Norway’s B2 Holding, acquiring an NPL portfolio
worth €144 million from Hellenic Bank in
2018. Since obtaining its Cyprus license in 2019,
APS has acquired a small NPL package worth
€245 million, and is also known for taking on
Hellenic Bank’s ‘bad’ loans and real estate management
business.
Also on the list of licensed companies are
Cac Coral, which has acquired a €400 million
NPL package from the National Bank of Greece
(Cyprus), while CYMC III and Gordian Holdings
have acquired an NPL package sold by BoC
known as Helix 1 with a gross book value of €2.8
billion – of which €2.7 billion related to non-performing
loans. The list also includes the Cyprus
Asset Management Company (KEDIPES),
which is a subsidiary of the Co-operative Asset
Management Ltd (SEDIPES), the successor entity
of the former Cooperative Bank of Cyprus. NPLs
of the former Coop Bank is owned by SEDIPES
and managed by KEDIPES, through Altamira
Asset Management Cyprus. Alpha Bank signed
a long-term partnership agreement with Italy’s
biggest loan recovery specialist doValue for managing
the bank’s portfolio in Cyprus, which includes
bad loans and real estate assets with a total
value of €3.2 billion. Reportedly, doValue is to establish
an NPL management company which will
take on Alpha Bank’s NPLs.
With a large proportion of these NPLs relating
to real estate assets, and European Banking
Union directives dictating banks cannot hold on
to a property they acquire through foreclosures
or debt-to-asset swaps for more than three years,
analysts have raised concerns banks will offload
their properties either by directly selling them to
the market through asset management companies,
bringing property prices further down, or packaging
more asset-backed loans to investment funds.
Further uncertainty in this market is being caused
by the pandemic, and once the foreclosure freeze
is lifted in October 2020 and loan repayments reinstated
in 2021, the Central Bank has warned that
NPLs could increase and shrink the value of the
assets – causing further losses to bank portfolios.
The business
world is facing
a new socioeconomic
reality due to
the Covid-19
pandemic. The unprecedented
crisis brought a number of
significant challenges, but
for RCB Bank human life had
to be placed in the epicentre
of both business and society
at large. RCB Bank, as a
responsible business, stepped
in without delay to continue
offering a high level of service
to corporate and individual
clients via its digital channels
and tools which are the future
of banking during and post the
pandemic. At the same time, it
acted quickly in securing and
donating 12 medical ventilators
to the health authorities
which are lifesaving when
dealing with Covid-19 and
have empowered the medical
services of the country.
Kirill Zimarin
CEO
RCB Bank Ltd
Core Tier 1
Capital of
Cyprus banks
15.1%
16.6%
17.0%
2018 Q4
2019 Q3
2019 Q4
60 Country Report CYPRUS 2020