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