New warnings about the suspension of divestments were issued by the President of the Cyprus Asset Management Company[/B] (KEDIPES),[/B] Lambros Papadopoulos,[/B] warning that due to the frequent interventions in the context of divestments, cash inflows from the management of non-performing loans will be reduced.
In a decision, the Parliament extended the period of suspension of divestments until the end of next January for non-performing loans secured by a primary residence worth up to €350.000, loans for commercial property with a turnover of up to €750,000 and agricultural land worth up to €100,000, with Mr Papadopoulos noting that this regulation affects loans totalling €2.9 billion, i.e. half of the KEDIPES portfolio.
"Due to the frequent interventions, cash inflows will be reduced and the ability to fully repay state aid will be negatively affected," Papadopoulos said at a press conference on the management results for Q3 2022.
In response to questions, he said that if the suspension only applied to primary housing, it would be more manageable, since there are no divestments of primary housing, while now the suspension has a more multiplier impact due to the inclusion of parcels of land and commercial housing.
"For us, divestment is a tool not an end in itself, but by starting the divestment process we very often find consensual solutions, especially when we talk about strategic defaulters," he said."
According to the results, KEDIPES' cash inflows in the third quarter stood at €93.1 million, down 19.2% compared to the previous quarter of the same year and down 3.5% compared to the same quarter last year. The decrease on a quarterly basis is due to seasonal factors and the contribution of €12.3 million from the divestment of KEDIPES' holdings in commercial cooperative companies.
According to Mr. Papadopoulos, the results are in line with KEDIPES' business plan, while the next repayment towards state aid will be made in the fourth quarter and will be in the range of €60 to €80 million.
In addition, cumulative cash inflows since the launch of KEDIPES' operations on 1 September 2018 amounted to €1.55 billion, with receipts from loan and property management amounting to €1.48 billion.
Total asset deleveraging since the start of operations amounted to €283 billion, while total loan write-offs under consensual solutions amounted to €1.28 billion.
Loans at face value stood at €6.24 billion at the end of the third quarter, up from €6.3 billion at the end of the second quarter of 2022 and €6.51 at the end of the same quarter last year.
KEDIPES' assets at the end of the third quarter of 2022 stood at €6.96 billion at face value and included €121 million in cash, €582 million in real estate and €631 million in serviced loans.
At the same time, operating expenses and asset management expenses in the third quarter of 2022 amounted to €25, million, down by 6.9% on a quarterly basis and by 2% year-on-year.
In relation to the Asset Protection Scheme, claims totalling €105.9 million have been submitted, to date, by Hellenic Bank (ET) for the period 1 September 2018 to 30 June 2022, with the last three claims for Q4 2021 and Q1 and Q2 2022 involving a reduction in claims of €5.1 million, €0.6m and €0.6m respectively, mainly due to revision of impairment parameters by ET and adjustments. KEDIPES, has made total payments of €78.2m or 74% of the Claims submitted to date.
Will be affected by "rent versus installment"
The amount of repayment of state aid in 2022 amounted to €230m, while the total amount of repayment since inception was €800m representing 27% of total state aid. If property transfers to the Republic of Cyprus are included, the repayment of state aid increases to €940 million.
However, Papadopoulos said that the repayment of state aid will be affected by the completion of the rent-for-dose project, as KEDIPES will be required to acquire the properties securing the non-performing loans that will be included in the project.
In particular, Papadopoulos estimated that if the plan is accepted by all the beneficiaries (banks and credit purchase companies), it is estimated that up to 1,250 properties will be included, corresponding to "up to three quarterly repayments of €60 million, i.e. €180 million for the purchase of the properties in the rent-to-own plan". However, he estimated that the final plan would be for a third of this value.
Papadopoulos described the plan as "very favourable" and urged vulnerable borrowers to consider it very carefully, "because we are unlikely to see anything better for this category of borrowers". He explained that the state would pay the rent and they would have the right to repurchase after fifteen years.
[P DISCUSSIONS CONTINUE WITH BANK OF CYPRUS ON SMALLER PERIMETER[/B]In response to a question regarding the future of the "Ledra" project, which involved the sale of a portfolio of outstanding loans to the Bank of Cyprus, KEDIPES Director Marios Papadopoulos said following the State's decision not to proceed with the sale of local authority loans, which had a State guarantee, KEDIPES proceeded with contacts with the bank to explore the possibility of selling the remaining portfolio, which involved loans worth between €100 million. to around €150 million.
"That's where we are, contacts are basically ongoing," he added.
No new voluntary exit plan
Asked if a new voluntary exit plan is expected, Marios Papadopoulos said there is no such decision at this stage.The KEDIPES president said that KEDIPES' staff amounts to 330 people, while the issue of KEDIPES' staff at Altamira has been largely resolved.
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