Daily Press Review - 2/5/2019

Hellenic Bank announces €320m profit

As above, with Alithia reporting the reactions of the parties to Hellenic Bank’s announcement that it generated a profit after the merger with the former Co-op. In a statement, AKEL member Giorgos Loukaides said that the profit emerged because the amount that Hellenic Bank paid to acquire the Co-op was lower by €297.9m than the value of the Co-op’s assets they acquired. It is reconfirmed that the Anastasiades government destroyed the Co-op in order to save a private bank, burdening the taxpayers with around €8b in liabilities. The Greens and the Citizen’s Alliance expressed the opinion that they don’t see a success story, but rather they note that the taxpayer suffered damages because of the Co-op selloff. The Co-op was destroyed so that Hellenic Bank and its shareholders (some of which are linked to the ruling party) would profit, their announcement read.

 

NPLs are a priority

As above. Politis reports on HB’s financial results for 2018 and mentions that the Bank’s management seems to be pleased. The paper mentions the commenting on the MoF’s recent statement that the government aims to reduce the NPLs ratio in Cyprus to a one-digit number by the end of 2020, the Bank’s CEO said that Hellenic Bank will make a contribution in order to achieve this target. We are examining the matter, I can make no commitments, Matsis reported while he said that up until now the Bank was dealing with other priorities (acquiring the former Co-op, integrating the new business and the share capital increase). Even though the handling of the NPLs was always high on the agenda, it now is our first concern.

 

Matsis: Invitation to ETYK

The CEO of Hellenic Bank, Yiannis Matsis said that he views a new collective agreement favourably, but he is negative in regards to offering employees incremental raises as foreseen by the previous agreement. The Bank employees’ union (ETYK) supports that the bank has a duty to offer the incremental raises to its employees. “We do not believe that we are obligated to do so because the collective agreement has expired”, he said and blamed the union that negotiations for the new agreement haven’t YET begun. Matsis said that he is against offering general incremental raises, and this is a matter he will table at the new negotiations. He supports the establishment of a system that will give raises according to the personnel’s performance. “Today, unfortunately the bank does not reward performance; we must offer raises but these should remove any imbalances. We have cases of employees that are paid less than their employees in similar positions working in the private sector”, Matsis said. It should be noted that the Bank of Cyprus also tried to establish a similar raise system, but was unsuccessful due to reactions by ETYK. “Our message to the staff and the union is that a contemporary organisation should be merit-based and reward its personnel correctly so that they are proud to be working for the bank. Matsis ruled out a new voluntary departure scheme, since after the acquisition of the business and deposits of the former Co-op, the organisation’s needs have been increased. 1100 out of 2600 former Co-op employees were transferred to Hellenic Bank. “The personnel is not sufficient and temporary staff will be hired in order to cover the needs”, Matsis underlined.

 

This is how Hellenic Bank made a profit

Haravgi reports that based on the financial results of Hellenic Bank, which were announced yesterday, acquiring the healthy elements of the former Co-op’s business, resulted in negative goodwill, meaning that Hellenic Bank recorded €297.9m in profits. As AKEL has estimated, through its House representative, this profit emerged because the sum that Hellenic Bank paid was by €297.9m lower than the fair value of the assets that were sold. It is reaffirmed that the Anastasiades government destroyed the Co-op in order to save a private bank, burdening the taxpayers in the process.

 

They want to give out loans

Politis reports that Hellenic Bank’s financial results show that the Cypriot banking system has an overall excess liquidity. Hellenic Bank alone has a surplus of €8.4b. Bank executives have expressed the willingness to offer new loans but at the same time they don’t want to repeat past mistakes. As a result, banks are very careful with their lending and they are looking to invest in portfolios abroad.

 

“Meeters-Greeters”: the team responsible for the ‘take-off’ of HB’s cards

“Meeters-Greeters” are responsible for 44% of new credit cards that have been ordered since the start of the year at Hellenic Bank. According to InBusinessNews’ information, the Bank has updated the contact information for a significant number of customers of the Bank. The “Meeters-Greeters” institution which was implemented by Hellenic Bank on 15 January at former Co-op branches, with a view to handle complaints as well as promote the usage of ATMs for the clients of the former Co-op, is an innovarive measure by the Group, which seems to significantly support the Bank’s customer service. Already, as InBusinessNews learns, the Bank is quite satisfied by the result of the “Meeters-Greeters” actions and will resume its operation until the end of June, estimating that it will further benefit the bank.

 

HB: What caused its improved ratios

Brief.com.cy offers an analysis of the reasons why Hellenic Bank’s ratios improved in 2018. They argue that the acquisition of NPEs by APS played as significant role: The agreement foresaw the management of NPLs worth €2.3b and assets worth around €150m, against the provision of management for the bank, through the creation of the first platform of NPLs management, which offers solutions such as D2As, recoveries, foreclosures and debt restructuring. The article also argues that the Voluntary Retirement Scheme and the Restructuring in 2017 also played an important role: The Bank implemented the Voluntary Retirement Scheme which as set as its goal the departure of 200 employees, while it also proceeded to restructure the way the Bank operated with a new organisational structure which was meant to improve the Group’s services, procedures and effectiveness. The article also mentions the selloff of NPLs: In 2018, Hellenic Bank became the first banking institution of the country to proceed to sell NPLs, leading the way for more NPLs selloffs. The selloff concerned an NPLs portfolio, of which mainly non-retail loans, to B2Kapital Cyprus Ltd worth €144m. The article goes on to say that the acquisition of the “good” part of the Co-op also played a significant role: In September 2018, after the deal with the former Co-op was reached, Hellenic acquired the “good” part of the Co-op, thereby achieve the expansions and diversification of the bank’s loans portfolio and reducing risks. The article also argues that that the share capital increase also contributed to this improvement. In March 2019, Hellenic Bank successfully completed its share capital increase by €150m (€100m through the issuance of preference rights and €50m through private placement to Poppy Sarl.

 

The 30 CEOs of Cyprus Companies

In its May issue, Economy Today presents the profile of the CEOs of the 30 largest companies in Cyprus in terms of their financial results and contribution to the economy.

 

Matsis: Hellenic Bank wants to give raises

Hellenic Bank CEO, I. Matsis revealed the policy the bank wants to follow with regards to giving raises to its employees, and the policy for the negotiations with the trade union side for renewal of the collective agreement. Asked about this in the presentation of the bank's results for 2018, Mr Matsis stressed that the goas is to balance out the current wage imbalances in the bank. He said we want to give wage increases to the staff, however we want to do it in a fair way.  There are currently cases of employees who are paid below similar positions in the private sector while there are cases that are paid higher. Hellenic’s CEO said that ETYK was invited to begin talks on the renewal of the collective agreement but the union refused to come to the negotiating table insisting that the 2019 increments be paid out first and subsequently begin the negotiations, something which the Bank does not accept.

 

Winds of Change

The opinion article refers to the Financial Times report about Cyprus finding a more stable footing since losing access to international capital markets in 2013. Cyprus experienced strong demand for its inaugural 30-year bond sale in the latest sign of the country’s recovery from a fiscal and economic crisis that peaked six years ago. Cyprus has the fourth highest percentage of public debt after Greece, Italy and Portugal at 102.5%.  The agreement for the merger of Cop with Hellenic contributed to this, however, the Finance ministry’s target is the reduction of public debt at 90 percent of GDP next year.

 

Large profits in 2018 brought back memories of 2010 profits

The article says that the profits of Hellenic Bank in 2018 amounting to 320 million following the absorption of the healthy part of the Co-op brought back memories of 2010. Very important for Hellenic’s profits was the absorption of the Coop last September. According to Hellenic’s CEO, Ioannis Matsis, when presenting the results of the bank, the most important parameter is not profit but the capital increase, while CFO, Mr. Kramer set that the foundations have been laid so that the bank can build a better tomorrow.

 

Banks’ desire to lend

The article talks about the banks’ desire to lend through a new series of lending programmes. Although the lending criteria are strict, however, as banking circles note, the prevailing conditions in the market are favourable, especially for those borrowers that have the ability to borrow. The article presents the banks’ lending programs, in particular, Hellenic Bank presents the MEW program with which it enables the public to easily fund their needs and unlock their properties.

 

Cyprus’ towers

There is a surge in construction across Cyprus. Every city wishes to have its own skyscraper changing the housing image of the island, recalling images of Dubai or a little Manhattan. Paphos and Larnaca are the only Cypriot cities that don’t have any high-rise buildings. For many years the article reports, the Shacolas tower was a point of reference for the housing development of Nicosia. However, the 11 storeys of the Shacolas tower seem to be very few. The article refers to multiple buildings that have already been built and others that are still under construction. The article refers to Wargaming’s building “The Resident”. It mentions that the giant, egg-shaped building is 18 storeys high and hides within it the tech world of Wargaming. The 12 storeys are offices, while on the ground floor there is a reception area. The building also has a cafeteria, an engine floor, a rooftop and three basements that have 2 storeys for parking. On the 3^rd basement storey there is a modern gym and spa as well as a space for the relaxation of the personnel.

 

SG of PEO: Focus on solution and reunification

The Secretary-General of trade union PEO, Pambos Kyritsis said that for the Cypriot employees, the 1^st of May is a day of reaffirmation of the struggle to reach a solution and reunite the country and the people. In his speech at a joint celebration for the first of May, that PEO held along with T/C employees unions in a field at Ledras Palace, Kyritsis reported that the working class trade union movement is still committed to the goal of reaching a bi-communal federation solution, that will establish one state, with one sovereignty, one citizenship, a single international presence and the political equality of the two communities, as this has been described in the relevant decisions of the United Nations, for a demilitarised and independent common country for all Cypriots. Kyritsis also mentioned the Co-op, expressing the conviction that a huge achievement of the people that dates back 100 years, was sold out overnight and the Cypriot public will not only pay for the Co-op’s damages but is also called to pay for the government’s guarantee of Hellenic Bank’s profits.

 

Banks reduce NPLs and personnel

NPLs in Cyprus amount to €10.27m. However, their reduction also brought a reduction of bank employees, something that until recently was only possible through Voluntary Departure Schemes. Even though technology will inevitably reduce the bank personnel even further in the future, ever since loans started being sold off in 2017, the second biggest bank in Cyprus closed down, while the remaining entity of the bank changed “character”. According to the latest information of the Central Bank of Cyprus, loans were reduced by €743m or 6.7% by the end of 2018, compared with the end of September 2018, while the net balance sheet of restructured loans was reduced by €660m. The NPLs to total loans index marked a drop from 31.8% in the end of September 2018, to 30.3% in the end of December 2018. It should be noted that from the 2015 to the end of 2018, there was a total reduction in NPLs of €17b (62.4%). Out of the €10.27b NPLs, the €4.77b concern company NPLs (€4.08b by SMEs), while households hold €5.17b in loans. At the same time however, the loan sales that have been achieved many of the banks foresaw the transfer of bank employees to special NPLs management companies for the servicing of NPLs (servicers). Up until now, 3.540 people have departed from banks via Voluntary Retirement Schemes from the start of 2013 to the end of 2018 (when the Co-op matter was settled and 1.040 people departed). Since the start of 2013, a total of 9 Voluntary Retirement Schemes have been implemented. Bank of Cyprus, Hellenic Bank, Co-op and Alphabank are the banks that proceeded with such schemes. However, many people were transferred to the special loans servicing companies, due to the goal to reduce NPLs. As the article reports, bankers in Cyprus have repeatedly said, that the country has an abundance of banks and insurance companies compared to its size and its population. According to information, each bank employee handles €8b assets, while the EU average is €16m assets. Hellenic Bank after the deal with the Co-op, now has around 2.600 employees and 135 branches in Cyprus. Bank of Cyprus, after closing down 15 branches, is now left with around 105 branches. As regards the personnel, it has 4.355 employees in Cyprus and abroad. Personnel costs for Bank of Cyprus amounted to €217m in end of 2018. Personnel costs for Hellenic Bank, for the 9 first months of 2018 amounted to €59.3m, compared with €63.7m in the same period of 2018, which made up 43% of its total expenses. As it comes NPLs sales that have also brought changes in bank employees, there were a total of four such deals in the Cypriot banking system selling off €2.9b NPLs. Bank of Cyprus has reached 3 such deals while Hellenic Bank reached 1 (sold €145m NPLs to B2Kapital)

 

Court of Arbitration cancels HB’s €1 billion VAT obligation

The Court of Arbitration cancelled a Tax Commissioner decision, with which Hellenic Bank was obliged to pay €857.000 in VAT, an amount that exceeded €1m after added charges were imposed since 2014. As the Court’s decision reports, the main matter at hand, concerned the confirmation of a tax imposed for services that Hellenic Bank was receiving from abroad, related to its Visa Card and Master Card accounts, which were considered by the VAT authorities as processing, clearance and authorisation services for the transfer of money related to credit cards, which are charged with the normal rate of VAT. After studying the folder, the Court realised that in determining the VAT due, the competent services didn’t conduct an adequate investigation.

 

Insurance companies reinforced

The article reports that the Cypriot insurance market showed a significant dynamic in 2018. According to information by the Insurance Association of Cyprus (IAC), the life insurance sector was increased by 8.8% compared with 7.8% in 2017 compared to 2016. The general sector marked a 3.1% increase compared to 2017, while it marked a 3.9% increase compared with 2016. The total amount of insurance fees for the life insurance sector, including the health and accidents sector, rose to €499.7m in 2018 compared to €453.7m in 2017. The General Sector produced €383m insurance premiums in 2018, compared with €371.5m in 2017. CNP Asfalistiki ranks first in the General Sector with €50m in insurance premiums, followed by General Insurance of Cyprus (a subsidiary of Bank of Cyprus) with €48.9m, Universal Life with €48.4m ,Trust with €33.15m, Pancyprian Insurance (subsidiary of Hellenic Bank) with €29.5m and CNP Cyprialife with €14m.

 

KPMG Managing Director: The key is to safeguard confidence

The Managing Director of KPMG, said that the major stake for 2019 and 2020 is whether our economy will continue with the same growth rates. He reported that among the significant challenges of 2019, is the course of the banking sector, after the absorption of the Co-op by Hellenic Bank and the maintenance of increased regulatory capital in our banks. Furthermore, a big challenge will be the management of NPLs as well as stance of the asset management funds that purchase such loans.

 

They want “slaves” instead of employees

Openly and provocatively, the organized industrialists and merchants, proved once again that they are hostile towards their employees. At least, this is how the Limassol port employees interpreted the announcements made by the Cyprus Employers and Industrialists Federation (OEV) and the Cyprus Chamber Of Commerce and Industry (KEVE) following the recent strike at Eurogate. The two organisations described their employees as “an uncontainable professional team”, “extortionists” and asked the government and parliament, to criminalise the strikes. The Secretary-General of the Pancyprian Federation of Labour (PEO) Mr. Athos Eleftheriou, answered accordingly to this provocative stance of OEV and KEVE, while also questioning them and claiming that “they want their employees to be captive to their employers’ disposition”.

 

Increased number of trips despite expensive fares

Kathimerini Economy reports that estimations show that by the end of April, approximately 120.000 travellers will fly from the Larnaca and Paphos airports, which is 5,8% higher compared to last year’s numbers. Over the Easter of 2019, Cyprus Tourists showed a liking of cruises, but because Cypriot ports provide a limited amount of choices, they opt to travel to the ports of Piraeus, Copenhagen and Rome. From the total number of travellers, only 5% concerns cruise tourism, nonetheless it is a higher percentage than last year. Travel agents highlighted the potential of reinforcing cruises from Cypriot ports, especially after improving the Limassol port’s infrastructure. They also added that, cruise ship companies should be provided with incentives in order to add the Limassol port in their route. There’s been a significant push in cruise tourism after actions taken by the companies TUI and Celestyal. In fact, in November 2019, TUI will launch cruises which will start from the Limassol port within the Fly and Cruise framework. At the same time, Celestyal’s ’Seven Days-three continents’ routes will be launched in December 2019.

 

Patients’ request to pediatricians

The president of the Pancyprian Federation of Patients Associations and Friends (POSPF), Mr. Marios Kouloumas, asked doctors to registered for GHS. He thanked the hundreds of doctors who have already registered, in order to have a sufficient amount of doctors on the implementation of the first phase. He called pediatricians to register as well, and urged them to consider how significant this reform will be in providing high-quality health services to children in Cyprus. He ensured that every doctor (of any specialisation) who registers with the GHS will have the POSPF’s support and they commit to be by their side throughout the GHS’s implementation.

 

SG of AKEL: Strength in unity

In his speech at an event organized by Pancyprian Federation of Labour (PEO), Cyprus Left party, to celebrate 1^st of May, the General Secretary of AKEL Antros Kyprianou, stated specific dilemmas that are currently in front of the Cypriot citizens, also in view of the upcoming elections for the new Members of European Parliament: “Do we want democracy for all or small groups to serve the few? A state that takes care of everyone or circles for somebody's business? Do we want an economy that invests in production and knowledge or races with towers and casinos? Do we want wealth to generate prosperity for all or end up in the hands of a few and increase inequality? Do we want Cyprus and Europe to serve the needs of many or the interests of the few?”.

 

Ch. Pazaros: "Casino, Marina and anchorage will improve our tourist product"

Paphos Municipal Councelor of DYSI, Charalambos Pazaros, in an interview, when asked “What Paphos need right now in terms of development”, he stated that: “Paphos currently needs development projects that will refresh and improve its tourist product. Whether we like it or not, we are financially dependent on the tourism industry. Therefore, I firmly believe that Paphos urgently needs a craft berth, a casino and Paphos marina. These three projects, if implemented, will radically change Paphos and provide a new, dynamic growth which is so much in need of”.

 

Pupils of Zakaki area alert Limassol Municipality

Dialogos reports on study carried out by the Ecological Committee of Zakaki Gymnasium (secondary education) and the problems that were communicated to Limassol Municipality and other entities. According to the research, one of the most serious problems that the students in the area recorded is that of increased noise pollution and crowding in the streets. Because of the casino, many cars are parked all day long outside of homes, making it difficult for residents to move around, while at night the situation becomes even worse.

 

30 heads of Cypriot companies that control more than 20% of national GDP

In the cover story of the new issue of EconomyToday magazine titled: “30 head of Cypriot companies that control more than 20% of national GDP” includes Craig Ballantyne Property Manager of City of Dreams Mediterranean, highlighting its profile and professional background.

 

Lawrence Ho: The construction of the casino begins

Republishing the interview of Mr Lawrence Ho in Gold Magazine April 2019 issue, the article states that the Chairman and CEO of Melco Mr Lawrence Ho expressed his enthusiasm for developing a world-class integrated casino- resort to put Cyprus on the map as a key tourist destination in the region and the world, noting that the construction of the casino, which has recently awarded to Avax and Terna SA J.V., is set to begin in April. City of Dreams Mediterranean will be the first of its kind in the region with the highest standards of service and quality. At the same time, he stressed that the goal is to build one of the largest integrated casino-resorts in Europe, for which Melco has a lot of experience.

 

A new city in Fasouri

 

According to Politis, a new city is being created between Asomatos and Limassol. The start was made by the casino-resort, which was the “engine” to set in motion other developments that were planned in the recent past. Their main feature is luxury, making the area one of Limassol's most expensive areas to live in. Besides, its proximity to Lady Miles Beach, the quick access to the highway, the infrastructure and the services it offers (golf courses, casino, MY Mall Limassol) and rich green areas make it a pole of attraction for both locals and foreigners.

 

The daily €10.000 wager for the casino-resort

According to Philenews, in April 30, 2021, the casino-resort project will be completed and put into operation. If it is not completed, the owner will be charged €10,000 per day, for each day the casino is closed. This process can continue for up to 100 days or up to €1 million. Then, as stipulated by the government's contract with the company, it can go as far as terminating the 30-year license granted to the company, which includes 15 years of exclusivity. Updating the story, the article mentions that due to delays in issuing the required licenses for the construction of the casino-resort, the company and the government are negotiating the transfer of the launch date to a later point.