Co-ops see no benefit to selling loans

Co-operative banks saw no benefit in selling loans and it was not part of its strategic planning, the chairman of the Central Co-operative Bank (CCB) said on Wednesday.

Nicolas Hadjiyiannis said they would not benefit from the sale of loans due to the nature of the co-op banks’ portfolio and the way they operated.

The overwhelming majority of loans in co-ops concern households.

Last week, the CCB posted a €228m loss for the first nine months, announcing that it would need additional taxpayer cash to meet its capital requirement of 14 per cent.

It is estimated that the CCB would need between €150m and €200m following additional write-downs of non performing loans (NPLs) that depleted its capital reserves to 12.01 per cent, barely over the minimum capital requirement.

Speaking ahead of a meeting to discuss NPLs with President Nicos Anastasiades, and the brass of Bank of Cyprus and Hellenic, Hadjiyiannis said headway had been made as regards loan restructures.

Some 5.5 per cent of total NPLs were restructured last year with the CCB aiming to complete 18 per cent by the end of 2015.

Co-ops were currently restructuring loans worth €150m, exceeding its goal of €120m per month.

Hadjiyiannis however, acknowledged that more work had to be done since only a small number of its 120,000 customers had been contacted so far.
The boost in loan restructures came after the CCB cut its lending rate by 1.5 percentage points provided loans were serviced.

The state is a 99 percent majority shareholder in co-ops, following their €1.5bn taxpayer-funded recapitalisation.

Authorities want to get the additional recapitalisation done before the end of the year because as of January 1, 2016, undercapitalised banks across the Eurozone will become the remit of the Single Supervisory Mechanism, which has different recapitalisation rules and does not allow for government support.