Hellenic bank to acquire performing loans from RCB

Editorial
-
0
Hellenic bank to acquire performing loans from RCB

Hellenic Bank announced that it has entered into an agreement to acquire a performing loan portfolio (the “Transaction”) from RCB Bank Limited, which was previously known as the Russian Commercial Bank (Cyprus).

According to a statement, the Transaction involves a performing loan portfolio of gross book value of around €556 million, related cash collateral and other credit balances of approximately €89 million and letters of guarantee of about €23 million. As part of the Transaction, up to 16 employees from RCB Bank Limited who manage this portfolio will be transferred to the Bank.

About 75% of the loans are Cypriot exposures, while the remaining 25% are real estate loans in the European Union and the United Kingdom. The main sectoral exposures are: 37% real estate and construction, 29% hotels, and 19% wholesale and retail trade. About 54% of the Cypriot exposures relates to existing clients of the Bank.

The loan portfolio is well collateralised and comprises of performing business loans to 103 borrowers. The borrowers involved will be vetted for sanctions compliance and AML clearance, in line with the strict monitoring performed by the Bank to manage all related risks and comply with the applicable sanctions imposed on Russia and Belarus. The Bank will have the right to refuse onboarding borrowers that fail to meet its standards.

The loan portfolio comprises: Tranche A (relating to only Cypriot exposures) of about €292 million and Tranche B of around €264 million. The acquisition of Tranche A is expected to be completed by 24 March 2022, while the acquisition of Tranche B is expected to be completed by 31 May 2022, subject to relevant due diligence, final agreement and all relevant regulatory approvals.

Based on September 2021 figures, the Bank’s performing loan portfolio is expected to increase by about 11%, while the pro-forma NPE ratio (excluding APS-NPEs) will be reduced to approximately 13.4% from 14.5%. The Bank’s risk weighted assets are expected to increase by about €656 million, resulting in a pro-forma capital adequacy ratio of 2000%, compared to 22.3% as of September 2021. On completion of acquisition of Tranche A, the Bank’s pro-forma capital adequacy ratio is expected to be around 21,0%.

Oliver Gatzke, CEO of Hellenic Bank said: In line with the Bank’s strategy of growing its business in Cyprus, the Transaction increases the Bank’s client base in business lending, provides cross selling opportunities, improves its operating income through higher interest income and creates potential for growing its non-interest income.

RCB announcement

RCB Bank Ltd announces that it has entered into an agreement with Hellenic Bank Public Company Ltd for the sale of a performing loan portfolio of up to c. €556 million, related funds on the accounts of the corresponding borrowers and related off-balance sheet obligations.

The loan portfolio being sold comprises of two tranches – Tranche A of c. €292 million relating to Cypriot exposures and Tranche B of c. €264 million relating to Cypriot, other European and United Kingdom exposures. The sale of Tranche A is expected to be completed on 24 March 2022, while the sale of Tranche B is expected to be completed by 31 May 2022, subject to all relevant regulatory approvals.

The loan portfolio is well collateralized and comprises of mainly corporate loans. About 75% of the loans are Cypriot exposures, while the remaining c.25% are commercial real estate loans in the European Union and the United Kingdom. The portfolio includes exposures to Cypriot and other European borrowers in the following main sectors: hotels and accommodation, commercial real estate, construction and development, wholesale and retail trade, manufacturing, food and beverage, renewable energy and education.

The sale of the loan portfolio shall strengthen further the capital and the liquidity buffers of RCB Bank Ltd and shall create additional substantial buffers, thus allowing for significant absorption capacity of any potential external shocks. The total capital adequacy ratio of RCB Bank Ltd shall increase from c. 21% to over 27%. The Bank’s liquidity shall exceed the total amount of all liabilities, which enables RCB Bank Ltd both meeting its obligations towards all of its clients in full as well as to maintain sufficient levels of liquid assets for its further operations. RCB Bank is expected to receive a total amount of over 500 million Euros from the sale.

© 1999-2022 Stockwatch LTD

Editor’s note

The day Russia invaded Ukraine, Russian state-owned VTB Bank, which got slapped by the U.S. with sanctions the same day, transferred its stake in Cyprus’ RCB Bank to the two remaining shareholders, both of which are companies registered in Cyprus.

Government plans mortgage-to-rent scheme

Elias Hazou
-
0
Government plans mortgage-to-rent scheme

The government will formally seek approval from the European Commission later this year to transform the successor entity to the failed co-op bank into an asset management company.

In parliament on Monday, finance ministry official Anthi Chrysostomou-Lapathioti said they will reach out to the EU’s Directorate-General for Competition likely in July.

At the same time, she told MPs, the government is devising a mortgage-to-rent scheme to help out vulnerable borrowers. The scheme’s goal will be to protect primary residences and business premises.

In June 2018 the state-run cooperative bank was forced to sell its operations to Hellenic Bank after its failure to reduce the non-performing loan stock fast enough wiped out its equity.

Kedipes was established as a successor entity to manage the non-performing loans, real estate and other assets amounting to €8.2 billion, that were not part of the transfer to Hellenic Bank.

Among them were non-performing loans of about €7 billion.

The remainder of the co-op’s assets and deposits were transferred to Hellenic Bank. Kedipes will take over €8.3 billion worth of assets of which €6.97 billion in NPLs, €0.5 billion in ‘good’ loans, around €620 million in immovable property, and cash and shares in other companies worth €230 million.

The co-op was also set to pay €139 million to 1,026 workers who opted for the voluntary retirement scheme.

Meantime Kedipes has been incrementally paying back the loan guarantees provided by the state as part of that transaction – the winding down of the cooperative.

Kedipes chairman Lambros Papadopoulos said that since its inception in September 2018, the entity has given back to the state some €1.1 billion.

Regarding the new relief scheme worked on by the government, the finance ministry said it will be similar to the ‘Estia’ plan – which however failed to get a lot of traction – and will concern primary residences and business premises of up to €350,000.

The finance ministry is currently formulating the eligibility criteria.

According to Lapathioti, they expect the scheme to have an impact on government finances, but the extent will depend on the amount that Kedipes pays to acquire the mortgage portfolio and the rent that it will pay out to debtors.

“For vulnerable borrowers, the rent will be paid by the government,” she added.

Mortgage-to-rent scheme

Under a mortgage-to-rent scheme, intended to help homeowners at risk of losing their property due to mortgage arrears, a person voluntarily surrenders ownership of their home to their lender. An entity buys the home from the lender and becomes the landlord. The borrower no longer owns their home, but will continue living in as a tenant.

Fast track procedure for building permits

Cyprus News Agency
-
0
Fast track procedure for building permits

More than 2,500 building permits have been issued under the new, fast-track procedure since it was implemented in October 2021, Interior Minister Nicos Nouris said on Saturday addressing the 29th General Assembly of the Cyprus Association of Civil Engineers.

Nouris said that starting June 2022 the new procedure will be available for large and complex developments, adding that the ministry’s goal is for all permits of investments with a value of over €25 million will be issued within 12 months.

Nouris said the ministry aims to revitalise the countryside, especially in mountainous, disadvantaged and remote areas, where there is a strong phenomenon of population decline and living conditions present particular challenges.

He announced that housing policy funds available for the countryside have tripled in 2022 compared to 2021.

The minister reminded that the state decided to finance affordable housing and rent projects with revenue from the upcoming operation of the casino, with 15 per cent of the net income going to the Cyprus Land Development Organisation, to support housing projects.

“In total, the expenditure for housing projects now reaches €125 million for 2022, an amount increased by 25 per cent compared to 2021 and doubled compared to the expenditures of 2018,” he said.

Nouris also said that a number of regenerations of historic centres, squares and recreation areas, coastal fronts and linear parks inside and outside urban areas are being implemented.

He noted that the construction of the three buildings of the Ministries of Interior, Transport and Justice in the area of the General Secretariat and the grandiose project of revitalisation within the city walls of Nicosia with the relocation there of the School of Architecture of the University of Cyprus, as well as incentives for building of student residences are some of the projects that stand out.

The minister mentioned three ongoing programmes regarding the government housing of Cypriot refugees. The first one is the repair and improvement of buildings in the government settlements, where so far projects of a value of €140 million have been implemented, while other projects worth €13 million are in progress.

A second programme aims to find a holistic and overall solution to the problem of static buildings. In the framework of a third programme, he said, elevators have been installed to date in 115 apartment buildings out of a total of 368, with another 60 cases are being implemented or being prepared for study.

Upward trend in building materials prices continues

Nigel Howarth
-
0
Upward trend in building materials prices continues

The price of building materials rose by 17.39% in February 2022 compared to February 2021, increasing the pressures on the construction and property sectors, according to the Cyprus Statistical Service.

Compared to the same month of the previous year, the Cyprus Statistical Service reports a price rises in metallic products of 27.15%, products of wood, insulation materials, chemicals and plastics of 19.88%, electromechanical products of 15.82%, mineral products of 7.20% and minerals of 5.88%.

The top 10 building materials price rises

  • Structural steel +48.08%
  • Raw (sawn) timber +47.96%
  • Wires and cables +36.02%
  • Iron rails +35.68%
  • Building iron +32.64%
  • Bricks +32.45%
  • Copper pipes +32.21%
  • PVC doors and windows +31.12%
  • Structural grid +31.03%
  • Industrial wood +30.03%

Price Index of Construction Materials 2020-2022

Two days ago, Reuters reported that COVID-19 outbreaks in China are resulting in “queues of container ships outside major Chinese ports are lengthening by the day”, “container loading is ‘decreasing massively’ at Shenzhen’s Yantian port, the world’s fourth largest container terminal, as port workers, truckers and factory workers stayed at home”.

Increasing energy prices are an added burden for the construction sector as the production of many construction materials require large amounts of energy.

Russia’s invasion of Ukraine will drive energy prices even higher. The invasion has caused oil prices to surge. A year ago, a barrel of Brent Crude cost US$64.35 and today it stands at US$107.11/barrel.

Further reading

Press release – Price Index of Construction Materials: February 2022

Land transaction volume & value increase continues

Press Release
-
0
Land transaction volume & value increase continues

WiRE FS, combining real estate knowhow with technology, has published its analysis of December 2021’s land transactions across Cyprus.

WiRE’s analysis indicates that compared to the previous month there has been a 35% increase in the number (1054) and a 44% increase in the value (€171.4 million) of land parcels transacted.

More specifically, Nicosia had the highest number of land transactions (390 transactions), with Lakatamia be the most popular location (62 transactions). Limassol had the highest total value of land parcels transacted (€76.5 million), with Limassol Municipality having the highest value of properties (€19.9 million).

Since the start of the year the total number and value of land parcels transacted was 8,947 and €1.2 billion, respectively. In particular, the year-to-date transaction volume of plots was 3,382 and of fields 5,731, while the transaction value was €515.5 million and €642.2 million respectively.

Compared to November 2021, transaction volume of plots increased by 75% in Nicosia, 15% in Limassol, 24% in Larnaca, 150% in Paphos, and decreased by 75% in Famagusta.

Over the same period transaction value increased by 71% in Nicosia, 33% in Limassol, 12% in Larnaca and 401% in Paphos, while it decreased by 78% in Famagusta.

Over the same period, transaction volume of fields increased by 29% in Nicosia, 42% in Limassol, 8% in Larnaca and 68% in Paphos, and decreased by 3% in Famagusta. The transaction value increased by 156% in Nicosia, 239% in Limassol, 86%in Paphos and 41% in Famagusta, while it decreased by 72% in Larnaca.

Pavlos Loizou, Managing Director of WiRE FS, commented that “Land transactions are indicative of the nature of the market in Cyprus; namely that demand is mainly driven by locals who acquire land for either own use, to build their homes, or for long-term investment.

“Due to low interest rates, non-existent deposit rates, and a lack of holding tax on owning real estate, many have chosen to acquire land as an easy way to invest in real estate. Recent experience however has shown that land, particularly in secondary areas, tends to become illiquid and loose its value quickly in times of crisis.”

Source: WiRE FS – Transactions of Plots December 2021
District Transaction
Volume		 Transaction
Value		 Area with
highest volume		 Transaction Volume Area with
highest value		 Transaction
Value
Nicosia 182 €29.1mln Lakatamia 44 Lakatamia €7.7mln
Limassol 126 €31.4mln Limassol Municipality 26 Limassol Municipality €6.3mln
Larnaca 62 €8mln Aradippou 9 Larnaca Municipality €1.6mln
Paphos 25 €6.4mln Geroskipou 5 Kouklia €1.7mln
Famagusta 3 €0.2mln Paralimlni 2 Paralimni €0.2mln
Total 398 €75.2mln – – – –
Source: WiRE FS – Transactions of Fields December 2021
District Transaction
Volume		 Transaction
Value		 Area with
highest volume		 Transaction
Volume		 Area with
highest value		 Transaction
Value
Nicosia 208 €21.8mln Lakatamia 18 Lakatamia €8.5mln
Limassol 207 €45.2mln Ypsonas 17 Limassol Municipality €13.6mln
Larnaca 95 €10.3mln Aradippou 22 Aradippou €3mln
Paphos 111 €15.1mln Peyia 7 Kissonerga €5mln
Famagusta 35 €3.8mln Paralimni 12 Ayia Napa €1.9mln
Total 656 €96.2mln – – – –

For a breakdown of movements in land transactions, visit https://goaskwire.com/.

Copyright © 2022 All Rights Reserved by WiRE FS

Building permits increase in number, value & area

Nigel Howarth
-
0
Building permits increase in number, value & area

December 2021 figures from the Cyprus Statistical Service show that a total of 778 building permits were authorised during the month; an increase of 13.5% compared to the number authorised in December 2020.

Their total area rose by 37.0% to 224.8 thousand square metres and their total value rose by 40.5% to €241.1 million compared to the corresponding month in 2020.

The December 2021 permits were authorised for the construction of 1,040 new homes (dwelling units) an increase of 38.3% on the 752 new homes authorised in December 2020.

The 778 permits were authorised for the following:

  • Residential buildings – 573
  • Non-residential buildings – 108
  • Civil engineering projects – 26
  • Division of plots of land – 47
  • Road construction – 24

New home construction

The 567 permits authorised for residential buildings provided for the construction of 1,040 new homes, comprising:

  • Single houses – 395
  • Buildings comprising two units – 54
  • Residential apartment blocks – 561
  • Residential/commercial apartment blocks – 30

Of those 1,040 new homes, 466 are destined for Nicosia, 289 for Limassol, 170 for Larnaca, 63 for Paphos, and 52 for Famagusta.

Building Permits Issued for the Construction of New Homes
(Number of Dwelling Units)

Month 2020 (Dwellings) 2021 (Dwellings) Increase/Decrease %age Change
January 696 702 6 0.9%
February 680 663 -17 -2.5%
March 524 1,033 509 97.1%
April 339 955 616 181.7%
May 956 1,061 105 11.0%
June 976 998 22 2.3%
July 1,141 874 -267 -23.4%
August
 790 554 -236 -29.9%
September 704 907 203 28.8%
October 903 801 -102 -11.3%
November 831 918 87 10.5%
December 752 1,040 288 38.3%
Totals 9,292 10,506 1,214 13.1%

Building permits: Annual Figures

During 2021, a total of 8,164 permits were issued compared to 7,023 in 2020; an increase of 16.2%. While the total value of these permits fell by 7.8%, their total area rose by 3.8%.

These permits authorised the construction of 10,508 new homes, an increase of 13.1% compared to the 9,292 new homes authorised in 2020.

According to the Cyprus Statistical Service “Building permits constitute a leading indicator of future activity in the construction sector.”

Further reading

Press release Building Permits: December 2021

1...165166167...698Page 166 of 698