More than 80.000 loans of retail banking and small and medium enterprises, along with properties that are mortgages, were sold by the Bank of Cyprus from 2018, with the latest transaction being announced yesterday, with the sale of 20.000 loans, mainly to individuals.
Yesterday 's announcement of the Helix 3 operation for clearing the balance sheet of troubled debtors has resulted in Bank of Cyprus reducing non-performing loans by 36% and real estate by 9%. As noted by the bank "in total, taking into account Helix 3, Helix 2 and the organic decline in the first nine months of 2021, the decline in NPLs for the first nine months of 2021 amounted to € 2,2 billion, reducing MES to € 0,9 billion and the percentage of MES to loans at 8,6% ".
The sale agreement of Helix 3 includes the sale of NPLs with a gross book value of € 577 million and real estate of € 121 million. The effect of the transaction on the income statement for the third quarter 2021 amounts to a net profit of approximately € 10 million and will exist positive effect on the capital ratio of common stock of category 1 of the group 7 basis points.
It started in 2018
The first major transaction of the Bank of Cyprus was announced in August 2018 and concerned the Helix 1 project. The agreement with Apollo Global Management was for a loan portfolio but also real estate, with a gross book value of € 2,8 billion. It concerned 14.024 loans to large and small businesses.
A few months later, Bank of Cyprus announced sale of another portfolio, codenamed Velocity 1, which concerned unsecured retail banking loans, with a total balance of EUR 245 million. The particularly troubled portfolio, with a book value of just € 34 million, was acquired by APS Delta.
In January 2020, Bank of Cyprus announced an agreement for the Velocity 2 project. The non-performing loan package had similar characteristics to those of Velocity 1 and this time was acquired by the B2Holding Group. It had a nominal value of € 398 million and a book value of € 133 million. The loans concerned about 10.000 borrowers, the vast majority of whom were private individuals (approximately 8.400) while several loans were also granted to small and medium-sized enterprises (approximately 1.600).
Following the agreement on Helix 1 and two years later, the Bank of Cyprus announced an agreement on the Helix 2 (a) project. The buyer this time is the asset management giant, Pimco, which would acquire loans with a book value of € 916 million with a contractual balance of € 1,46 billion. Although the book value of the loans was significantly lower than Helix 1, however, it included a lot more loans. A total of 22.224 loans, mainly to retail customers and small and medium-sized enterprises, which were secured by 5.616 properties.
It then announced a new agreement with Pimco for the Helix 2 (b) project for loans with a book value of € 545 million. Upon completion of the agreement, an additional 16.000 non-performing loans, linked to 4.000 properties, left the bank's portfolio.
Panikos Nikolaou: The MES index is in single digits
The Managing Director of Bank of Cyprus, Panikos Nikolaou, on the occasion of the sale deed, stated in a written message to the staff that "we are reaching the end of the journey that began in 2014. In total, from the high level of 2014, we reduced NPLs by € 14,1 billion or 94%, at levels below € 1 billion and the NPL percentage for loans by 54 percentage points, from 63% to levels below 9%. We are pleased with the progress we are making, compared to our medium-term strategic goals, and we remain on track to achieve a NPL percentage of loans of 5%. "
And as Mr. Nikolaou notes, "it is an important milestone in achieving our strategic goal of reducing risk in our balance sheet, a transaction with a positive effect on capital ratios and our results that at the same time allows us to achieve the goal a year earlier for a single-digit percentage of MES for loans ".
philenews.com