New and old challenges await the new CEO of the Bank of Cyprus, irrespective of whether he/she comes from within or outside the lender’s ranks. It is possible that the name of the new CEO to replace John Hourican will be made public with today’s announcement of results of the first quarter of 2019 or tomorrow at the annual meeting.
The state of play in the post-Hourican era is completely different. Non-performing loans stood at €15 billion when Hourican first took up his duties. Non-performing loans have been reduced to €4.8 billion. And within 2019 the problematic portfolio is expected to improve further.
About €1b of non-performing loans will be included in the Estia plan, reducing the portfolio of red loans to €3.8b. In addition, a second package of outstanding loans, Hellix 2, is expected to be sold with a loan value close to €1.8b. This means that by end of 2019 the non-performing loans will be reduced to €2b. New loans to be granted are also of utmost importance since the bank currently has high liquidity. The lender granted loans of €1.9b to the Cypriot economy in 2018.
At the same time, the new CEO should also manage the large stock of real estate the Bank has accumulated in its balance sheet from debt swaps. Over the past three years, the Bank sold real estate worth a total of €1b, and continues to confiscate new properties from debtors at a steady pace. As regards the working environment, the new CEO should manage the further reduction in the number of employees. This means that the dialogue with ETYK union has to resume.
Bank of Cyprus insists that the big bet of 2019 and 2020 is the process of digital transformation. Executives of the bank attach great importance to the specific project, which is probably the bank’s biggest challenge for its subsequent course. Several new digital products have already been launched, reflecting the overall picture of the banking industry worldwide.
At the same time, services such as the application for a loan through your mobile phone and QuickPay continue to grow. In fact, QuickPay transactions have exceeded €3 million per month. A big bet now is the Open Banking application since a client will be able to monitor all his/her accounts through the 1Bank application.