Free tickets to ‘A Place in the Sun Live’ at the NEC

Nigel Howarth
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Amanda Lamb, Jonnie Irwin and Jasmine Harman
Amanda Lamb, Jonnie Irwin and Jasmine Harman

A PLACE in the Sun Live is the UK’s largest and best attended overseas property exhibition and will next take place at the NEC in Birmingham 27th-29th September 2013.

All the popular property buying destinations will be covered, with houses, villas and apartments for sale in all the popular areas of France, Spain, Portugal, Italy, Turkey and Florida plus many more – so if you’re considering buying a holiday home or an investment property abroad, then a trip to A Place in the Sun Live is an absolute must.

As well as the chance to meet property agents from all over the world face-to-face, where you can get to know them and ask them any burning questions you have, you can also pop along to as many of the free-to-attend Q&A sessions with industry experts as you can squeeze in and meet the presenters of the TV show Amanda Lamb, Jasmine Harman, Jonnie Irwin and Laura Hamilton.

Advance tickets usually cost £10 each, but those who have been using the 4homes area of the Channel 4 website, may attend the exhibition FOR FREE!

Click here to get your Free tickets to A Place in the Sun Live.

NOTE – in its guide to buying a property in Cyprus, A Place in the Sun Live issues the following advice:

Buyer beware

There are two main issues in Cyprus, both involving title. The first relates to the ownership of properties in northern Cyprus – held by Turkey since 1974. Prices are cheaper there, but the former Greek Cypriot owners still claim much of the property and any purchase there is risky – whatever agents tell you.

The second issue is with the slow issuance of title deeds in southern Cyprus, combined with some dubious dealings by developers there in recent years, which makes proving clean title essential. Although the authorities have made steps to expedite the whole process, the situation has historically been that it has taken years for owners to get their title deeds following purchases or new building. So some buyers are, rightly, very reluctant to buy without them.

Loans of one billion euros to bank board members

Editorial
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central bank of cyprus

CREDIT facilities of more than €1 billion were granted in 2011 by the two large banks to members of their Boards, which were subsequently proved that they exceeded the limits set by the law.

Confidential data from the Central Bank register in detail the credit facilities granted by the two banks to directors and related parties.

The law prohibits banks to lend more than 20% of their funds to their directors.

Based on the data, the two banks exceeded this threshold in 2011, possibly due to capital losses after the haircut on Greek bonds.

Following the resignations of directors in 2011 and 2012, total loans declined significantly.

Among the credit facilities granted by Bank of Cyprus is that of former Chairman, Theodoros Aristodimou. In 2008 total facilities amounted to €182 million and by 2011 they reached €317 million. The CB data indicate that of the €317 million, there was no collateral for €25 million.

In the case of Cyprus Popular Bank, they are the credit facilities associated with former board member Platon Lanitis. Mr Lanitis had facilities of €300 million in 2008, which rose to €347 million by the end of 2012. The data indicate that for €16.5 million from the amount of €347 million there was no collateral.

Former CEO of Bank of Cyprus, Andreas Eliades had facilities of €4.4 million in 2011 million of which €1.1 million was not secured (non-secured).

Former CEO of Cyprus Popular Bank, Efthimios Bouloutas, had facilities of €2,2 million in 2010, which was almost all secured and former non-executive chairman Andreas Vgenopoulos had facilities of €1.6 million, of which €0.3 million was non-secured.

The facilities provided by Bank of Cyprus include €64 million, given to two former owners of Uniastrum, almost fully secured.

The figures of Cyprus Popular for 2011 include an amount of €105 million of Vassilios Theocharakis, of which €75 million are presented as non-secured.

Former head of the risk management of the Bank, Demetris Spanodimos had in 2011 facilities of €14 million, of which €11 million was non-secured.

The Central Bank data do not indicate in what form is the collateral that banks had for the facilities granted.

Unlike Bank of Cyprus, Cyprus Popular in 2011 exceeded the limit of loans that may be granted to related parties without collateral. The threshold is 2% of the equity of the Bank and they had reached 8.66%.

The data also include the balances of many other executives of banks and their related companies.

Loans of one billion euros to bank board members

President asks ETEK for advice on Title Deeds

Maria Gregoriou
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PRESIDENT Nicos Anastasiades has asked the Cyprus Scientific and Technical Chamber (ETEK) for its help in solving the Title Deeds issue by suggesting that architects or developers could give final approval for work completion, rather than having to wait for local authorities.

During a meeting at the presidential palace with ETEK president, Stelios Achniotis, Anastasiades raised the issue of drawn-out procedures relating to Title Deeds. There is a current backlog of 100,000 unissued, some of which go back two decades.

The issue was discussed in the context of attracting investment and curbing unemployment, Anastassiades asked for suggestions from the chamber on how the private sector could be utilised in helping to speed up procedures.

“The president said that because there are delays in getting Title Deeds, he wants the architect or the developer of the project to give final approval,” ETEK’s deputy chairman, Constantinos Constanti said.

When a house or flat or another building has been completed, the current procedure is that the owner take the application for a certificate of final approval to the municipality in which the property is located.

The municipality then goes to the property and compares the finished building with the architectural designs. If, after checking, everything is how it should be, then the certificate is issued and taken to the department of lands and surveys for the Title Deeds to be issued. This procedure takes about three months if the building meets the criteria of the design.

“The delays are caused by the municipalities who pay attention to all details. So if the design shows that something on the original design is not there, or a sliding door was put where there should have been a normal door for example, then the application is denied,” Constanti said.

In this circumstance, a new design showing the actual architectural dimensions of the building must be completed and the new design given to the municipality who then provides the developer with a new building permit.

Anastasiades also focused on aiding unemployed engineers. He gave instructions to the labour ministry to include terms that meet the requirements of engineer graduates in the scheme set-up by the government to find work for them

Achniotis said the chamber submitted a series of suggestions to the president concerning the measures announced by the government to restart the economy.

Achniotis said the handing of applications for a certificate of final approval should not be done at the expense of the environment and local communities.

Advice on title deeds

Fugitive lawyer appears in court

Nigel Howarth
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Limassol District Court Cyprus

INTERNATIONAL arrest warrants were issued against lawyer Marios Shiaeles and his wife Niki Fasaria when they skipped Cyprus seven years ago.

When they fled, Shiaeles allegedly took with him client funds estimated to be in excess of three million Cyprus Pounds (more than €5 million). Some of the alleged victims lost hundreds of thousands of pounds.

A year later a statement from the victims’ group said that the courts were insisting that that the couple had to be found before the fugitive lawyer’s assets could be seized.

“Based on this logic, if the police cannot find Shiaeles, justice will never be served and Shiaeles walks free with millions of pounds of stolen money,” it said.

“The Cyprus judiciary need to be encouraged to ensure that fair justice is delivered for the victims rather than the legal process hindering the victims and ultimately protecting the criminal.”

Earlier today we received news from two of Shiaeles’ alleged victims that the couple had been found and Shiaeles was apprehended. He appeared in court yesterday and was bailed to appear in the Limassol District Court on July 16.

Property problems in Cyprus

Editorial
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LAST month the All Party Parliamentary Group for the Defence of the Interests of British Property Owners in Cyprus held its first meeting, at the House of Commons.

The Group was set up by Bill Cash MP and others, prompted by the accounts they had heard from constituents of their problems over buying property in Cyprus.

About 30 people, purchasers, lawyers, MP’s and researchers met to share their information and frustrations, and to consider what could be done to resolve their problems. The Group had invited David Lidington and me to explain what the British Government can do to support them.

Some of the individual stories we heard about were very distressing: people who had invested life savings in buying a home in Cyprus, and now found themselves with no house, no money, and large and growing debts. We also get frequent calls at the High Commission from British citizens caught up in such cases. It must feel like a nightmare to live through. Not surprisingly, people in that sort of trap look for help.

Many of them are now engaged in legal action, against the developers who sold them their properties, or the banks who lent them money, or other actors involved.

The government cannot take over all these private legal cases for them, and it’s not where we can add best value. But it was certainly useful to hear from some of those concerned, and from the lawyers working with them, about some of the avenues they are pursuing. We will be discussing these further with them.

So if we can’t help with individual legal cases, what can we do? Three kinds of thing:

  • We take up with the authorities here generic problems in the way the processes work, whether it be the Land Registry, the courts, the banking sector or wherever. These issues are often on my agenda when I call on Cypriot Ministers, for instance. And we do have some impact: it was good, for instance, to see that the Cypriot Foreign Minister Kasoulides acknowledged the problem in his recent speech in London in April when he spoke to Parliament.
  • We look for specific ways in which we may be able to help Cyprus tackle some of these problems of process. The new government’s commitment to modernising and simplifying government processes, and the undertakings in its Memorandum of Understanding with the Troika, may create some specific openings.

So it remains an important part of the overall service we offer to British citizens in Cyprus. The APPG session was an important reminder for me of the human stories that are the reason why it matters to do the best we can.

Matthew Kidd
High Commissioner to Cyprus

Redefinition of non-performing loans

George Mountis BSc, MSc, Ph.D
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Redefinition of non-performing loans

non-performing loansMAJOR reforms to the definition of non-performing loans have been announced in a draft directive issued by the Central Bank of Cyprus (CBC) to banks and financial institutions domiciled in Cyprus.

As a result of these new preliminary instructions from the CBC there are significant concerns about soaring non-performing loans, since from now on what will matter will be the repayment ability of borrowers and not the actual value of the tangible real estate which is used as collateral.

In the Memorandum of Understanding (MoU) signed by the Cyprus government, it is clearly stated that the Central Bank of Cyprus will provide guidance on the classification of loans as non-performing (NPLs).

The NPL definition will be amended to include all loans due by more than +90 days, which will comply with the European and IFRS accounting standards. Note that by changing the NPL definition this will automatically imply a huge financial hit on the banks in terms of capital requirements.

The major amendment will be that where the value of the collateral (real estate) is greater than the amount of the loan outstanding, then even in those cases the loan will be classified as being non-performing (until now it was not) and the bank will need to make a provision for the difference between the amount of the loan and the value of the collateral. For instance, if a customer has a loan of €300,000 with a property (collateral) market value at €500,000 and this loan is not repaid normally, i.e. on a monthly basis (depending on the loan repayment schedule), then this loan will be classified as non-performing despite the fact that the value of the collateral is higher than the loan amount.

Furthermore, the underlining philosophy of monitoring existing and, importantly, granting new loans will be heavily focused on the repayment ability of borrowers and not so much on the value of the collateral as bankers practiced in recent years.

In summary, and as per the preliminary instructions drafted by the CBC, a non performing loan will be considered:

  • Any loan with arrears exceeding 90 days. That is, if a customer of a specific bank during a loan left unpaid three instalments.
  • Loans with adequate collateral, but with a delay of 90 days.
  • If 20% of the total debt of a borrower is not served (i.e. becomes non-performing), then all of the loans and other facilities will be categorised as non-performing in the bank’s books.
  • All restructured loans (e.g. extension of repayment terms, etc) will be made non-performing for a year. Also, the extension/lengthening loan twice in a year will require classification of the loan as non-performing. It is worth noting that the extension of a loan once in a year does not necessarily mean that the loan will be is classified as non-performing. Under the preliminary instructions from the CBC, the restructuring/rescheduling of loans will include:
  • Interest rate reduction. Previously, banks restructured the loan of a customer but at a premium: the increase of the current interest rate (‘re-pricing’), many times achieving an   increase of 2-4% on interest income. This will now change, affecting banks’ profitability but helping struggling households and businesses to repay off the loans.
  • Concession of a grace period for paying only the interest (interest only period), and granting a grace period for a full freeze of instalments. Any loans which were non-performing and after restructuring become performing will remain in the non-performing loans category for a year.

Based on the new guidelines drafted by the CBC, apart from loans, current accounts and credit cards will also be classified non-performing. Also, overdraft accounts will be considered as non-performing if they exceed a 5% limit for 90 days.

To clarify, once a loan is “classified” as a non-performing, this action does not automatically initiate the foreclosure/forced-sale procedure of properties (collateral). The troika indicated that the administrative hurdles and the legislative framework currently constraining the foreclosure and sale of loan collateral will have be amended so that the property pledged as collateral can be foreclosed within a maximum time-span of 1.5 years from the initiation of legal proceedings. In the case of primary residences, this time-span could be extended up to 2 to 2.5 years.

In the MoU it is stated that the necessary legislative changes will be implemented by 2014, macroeconomic conditions permitting. We believe that the time span for the eviction from primary and secondary residences will be subject to a significant debate as there are significant social and financial implications associated with it.

Also, we believe that given the present economic conditions in Europe, and specifically in Cyprus, it is not in the banks’ interest to repossess such assets as property prices have significantly decreased, something which will impact capital levels and profitability, and most assets are illiquid. However, we believe that new ‘mortgage rescue schemes’, such as the ones applied in the UK, should be used and should be strongly supported by the government.

All these reforms are in the right direction to create a reliable and dynamic financial system. With the above reforms, banks in Cyprus will be forced to make higher provisions which will have a direct impact on capital and profitability, consequently affecting households and businesses. All these guidelines are necessary however in order to regain credibility as a regional financial hub, creating banks with solid foundations that can serve the real economy of our country.

Dr George Mountis
Partner | Banking advisory | Leaf Research
[email protected]
www.leafresearch.com

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