Insider Business Banks in Cyprus face five big challenges

Banks in Cyprus face five big challenges

Banks in Cyprus are confronted with five big challenges as they try to balance profits and to take huge steps towards modernising their structure and services.

Two of their big challenges are directly linked to loan portfolios while another two are related to staff and clients. And all four challenges lead to the fifth one which is that of profitability and how the balance of revenue and expenditure should evolve.

Firstly, banks may face supervisory challenges in view of an apparent failure of fledgling Estia mortgage plan and its impact on balance sheets. The plan may be extended till the end of the year but there is little hope that the original target of reducing non-performing loans through Estia will be achieved.

Vulnerable borrowers have so far turned their backs on Estia with no significant change anticipated over the little time left before its expiration deadline.

What frightens bank administrations the most seems to be the response of Frankfurt’s ECB supervisors on the need for an accelerated rate towards the reduction of red loans which is the second highest among Eurozone’s member states.

Supervisory pressure is expected to intensify in the wake of efforts by banks to sell NPLs packages to investment funds. This is the second major challenge facing banks that have a large number of non-performing loans recorded on balance sheets.

Banks will be forced to sell a large portion of their portfolio to investment funds to reduce red loans. But the main obstacles is that banks cannot easily include loans associated with first homes up for sale.

On the other hand, the question is at what price they will be sold to investment funds, that is, how much the price is going to be discounted. Banks need to study how their capital base will be affected mainly by the selling price.

At the same time, pressure on the income base and possibly capital of banks comes at a time when administrations need to find a balance with the union of the island’s banks over the modernisation of the employees’ payroll framework.

 

Read more:

https://in-cyprus.com/cyprus-banks-challenged-with-ecbs-negative-rates-on-deposits-call/

Top Stories

Fifteen new corona virus cases detected out of 3,132 tests

According to the Epidemiological Surveillance Unit of the Ministry of Health 15 new cases of the SARS-CoV-II virus were detected out of a total...

Fifty Cypriots interested to be repatriated, Cyprus sends rescue teams – medical supplies to Lebanon

Cyprus Foreign Affairs Minister Nikos Christodoulides has said that 50 Cypriot nationals have shown interest for repatriation from Lebanon until 14:00 local Cyprus time,...

Unemployed people in Cyprus record monthly drop, annual increase this July

Unemployed people registered at the District Labour Offices on the last day of July 2020, reached 32,313 persons, according to a press release issued...

Cypriot Mission’s departure to Beirut (Videos & Images)

Two police helicopters, with a five-member team of the Catastrophe Response Special Unit and members of the Motorised Rapid Action Unit, as well as...

Greek and Qatari planes supply aid to Beirut after massive explosion

The European Union, Turkey and Gulf states are among those offering assistance to Lebanon following an explosion at a warehouse in Beirut that killed...

Taste

Octopus ‘Kathisto’ (or Octopus braised in Wine)

Ingredients: 1/2 cup Greek extra virgin olive oil 2 medium onions, chopped fine 1 large octopus, about 2kg (cleaned and kept whole) 3/4 cup dry red wine 1/3 cup...

Homemade lemonade

Ingredients: 1 cup lemon juice 1 cup sugar Method: Thoroughly wash the lemons with soap and warm water. Roll each lemon with the palm of your hand, pressing...

‘Striftaria’ mini cheese pies

Ingredients 1 ½ cup milk 2 tbsps. flour 4 tsps. of butter 3 eggs, slightly beaten + 1 extra with 1 tbs. of milk for spreading 1 pack of...

Mini potato canapes baked on salt

Ingredients Serves: 12 1kg small Cypriot potatoes rock salt, as needed 250g salted butter 300ml full fat cremé frâiche 1 pot cod or salmon roe Method Prep:20min › Cook:35min › Ready in:55min Take...