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

FM Christodoulides in self-isolation following confirmed case of close associate

  Foreign minister Nicos Christodoulides has become the fourth minister to go into covid self-isolation, following a confirmed case among his close associates. Christodoulides went into...

Concern over rise of covid hospital cases to 38, four critical-new infections over 100

  The Health Ministry today announced 113 new COVID-19 cases, out of 3,112 diagnostic tests, taking confirmed infections to 3,930. The health ministry has expressed concern...

Germany to go into circuit-break lockdown as virus cases surge

  Germany will impose an emergency month-long lockdown that includes the closure of restaurants, gyms and theatres to reverse a spike in coronavirus cases that...

1547-Highest ever number of new covid cases in Greece-deaths on the rise

  Greece recorded one thousand five hundred and forty seven new coronavirus  cases over the past 24 hours, the highest ever number since the start...

Huge 8500 euro fine for unmarked tobacco products

  A twenty nine year old was fined 8 and a half thousand euro for unmarked tobacco products that were discovered by police at his...

Taste

Squash soup

Ingredients: 1 kg pumpkin, cut into small cubes, approximately 5 cups 2 medium (400g) sweet potatoes, cut into cubes, approximately 2 ½ cups 1 chopped leek, only...

Mezedes

No visit to Cyprus is complete without enjoying the traditional meal of many small dishes known as ‘meze’. This large feast, which has been a...

Prawns with fried cheese, barley shaped pasta

Put the barley shaped pasta into a small pan with salted water, bring to a boil and when tender, drain. Peal the prawns leaving...

Salmon and shrimp sheftalies

Mix all ingredients for tabbouli in a bowl and keep to one side so flavours can combine. Prepare the sheftalies: wash and soak the casing...