Title Deed chickens come home to roost

Nigel Howarth
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13
Title Deed chickens come home to roost

IT HAS emerged that the EU has placed the Title Deed fiasco at the top of its agenda for high-level discussions between Cyprus government ministers and senior ranking EU officials scheduled for 10th July.

News of this development came at a meeting between Cyprus Interior Minister Eleni Mavrou and Pegeia Council.

During this meeting, Ms Mavrou brought up the Title Deeds issue in connection with the Leptos Harbour Shore Estate development in Coral Bay. Those who bought property on the estate have been waiting for Certificates of Final Completion and Division Permit for more than 40 years. (Obtaining a Certificate of Final Completion is a necessary stage in the process of issuing Title Deeds).

Ms Mavrou raised her voice and started shouting at the Mayor saying that they must issue Certificates of Final Completion immediately as Pegeia was holding hundreds of buyers to hostage during its long-standing battle with Leptos over development of the beach area.

The reason for her strong approach is that a high-level meeting is scheduled to be held on 10th July between senior ranking EU officials and Cyprus government ministers. Ms Mavrou referred to the hundreds of complaints received by the EU about the problem and how the EU had placed the Title Deed fiasco at the top of its agenda for these forthcoming discussions and how Cyprus was being ridiculed.

Pegeia municipal councillor Linda Leblanc who attended the meeting said “We’ve waited a long time for something big to break on this and I think the timing of the EU Presidency couldn’t be better!”

The Cyprus Title Deed fiasco

AT the present time, estimates put the number of properties in Cyprus without Title Deeds at 130,000.

This unacceptable state of affairs means that those who have acquired these properties are being denied one of their fundamental human rights as defined in Article 23 of the Constitution of Cyprus – the right to “own, possess, enjoy or dispose of any movable or immovable property”.

Furthermore, the government coffers would benefit to the tune of more than €1 billion if all those Title Deeds were issued and ownership of those 130,000 properties were transferred to those who acquired them.

Bank of Cyprus investigated by CYSEC

Alan Lawton
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2

Bank of Cyprus
THE Cyprus Securities and Exchange Commission (CYSEC) has started an investigation to determine why the Bank of Cyprus asked the state for €500 million in temporary state support instead of €200 million as it had initially announced, according to state broadcaster CyBC.

The Commission received a number of complaints from Bank of Cyprus investors and shareholders following this announcement.

The aim of CYSEC’s probe is to confirm whether and to what extent the Bank of Cyprus management withheld confidential information from the start, with the aim of misleading its shareholders.

The reasoning behind this is because there was no specific mention of the €500 million by the management during the general meeting of shareholders that was held on 19th June.

The state broadcaster also reported that CYSEC is conducting a probe into bank prices on the stock market and issues of possible price manipulation.

Protest at the Cyprus High Commission in London

Nigel Howarth
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7

Cyprus High Commission London protest
TIMED to maximise embarrassment to Cyprus by coinciding with its taking over the EU’s rotating presidency, a group of protestors held a peaceful demonstration outside the offices of the High Commission of the Republic of Cyprus in London’s St. James Square yesterday.

The wet weather didn’t dissuade the protestors who had travelled to London for the day from many parts of the UK including Aberdeen, Newcastle, Darlington, Stoke and Manchester.

Carrying placards reading ‘We demand and end to corruption now’, ‘Cyprus Island of fraud’ and ‘Cyprus unfit for the EU’ the protesters allege they have been defrauded or mis-sold property.

We understand that the Consul General invited a few of the protestors into his office for a chat. Although he said that would try and help in any way he can, his powers are limited.

We understand that further protests are planned in the coming months at UK overseas property exhibitions and Cypriots banks.

Island under the Troika microscope

Alan Lawton
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4

Cyprus: Troika EU Bailout application
THE TROIKA delegation, which is made up of some thirty representatives from the European Commission, the European Central Bank and International Monetary Fund, will evaluate the Cypriot banking sector’s portfolios as well as its capital requirements.

The delegation is expected to enter into three days of discussions with the Island’s government and the banking authorities starting today; it will also consult with civil service officials, political parties and trade unions.

Reports suggest that the team’s findings will help to decide the final amount and conditions attached to an EU rescue of the Cypriot economy.

Last week Cyprus became the fifth Eurozone country to seek an EU bailout after the Island’s banking sector suffered huge losses as a result of the writedown on their Greek government bond holdings. The banks also have sizeable private loan portfolios in crisis-hit Greece.

Frozen out of the of the international debt markets, Cyprus turned to Russia last year rather than the European Union. The Russian government lent the Cypriot government €2.5 billion at a below-market rate of 4.5 percent.

Meanwhile, the Island’s government has continued efforts to secure a bilateral loan from a ‘friendly state’.

Commerce Minister Neoclis Sylikiotis announced that some expression of interest has come from China regarding a partial cash injection or an outright takeover of the struggling Cyprus Popular Bank.

Mr Sylikiotis and the Cyprus Popular Bank CEO, Dr Michalis Sarris, travelled to China last week in a last ditch attempt to secure investment into the debt-laden bank or a bilateral state loan that would fend off the Island’s application for a European bailout.

Popular bank receives state bailout

Alan Lawton
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2

Cyprus Popular Bank
THE Finance Ministry said on Monday it had bought the shares in Cyprus Popular Bank, after the state pledged on May 17 to underwrite Popular’s attempt to raise €1.8 billion in equity.

Cyprus, which assumed the rotating EU presidency on July 1, became the fifth euro zone member to seek a financial lifeline from its European partners last week.

A team from the European Commission, the IMF and the European Central Bank were expected to start consultations with authorities on Tuesday.

Cyprus’ banking system has been heavily exposed to Greece, with Popular and Bank of Cyprus posting mammoth losses on writedowns of Greek sovereign paper, agreed by European leaders to make Greece’s debt pile more manageable.

The cost to bail out both banks, at about €2.3 billion, represents a sizeable chunk of Cyprus’ €17.3 billion economy and one the island can ill afford while it is shut out of international debt markets.

Private demand for shares in Popular Bank’s rights issue was minimal and the bank said it had received applications for just €3.013 million worth of stock.

Three days before the expiry of a European Banking Authority deadline for bank recapitalisation to meet capital strength benchmarks, Bank of Cyprus also asked for €500 million in temporary state support. That bid would be discussed in the context of the bailout.

“Banks’ capital needs will be assessed after a thorough examination of their assets and in respect of EU state aid rules,” the finance ministry said.

Reuters

Fitch downgrades Island’s top three banks

Alan Lawton
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1
Fitch downgrades Island’s top three banks

Fitch Ratings has downgraded the Bank of Cyprus, the Cyprus Popular Bank and the Hellenic Bank’s Long-term Issuer Default Ratings (IDR) and Support Rating Floors (SRF) to ‘BB’ from ‘BB+’, following the sovereign rating downgrade and removed them from Rating Watch Negative (RWN).

The Outlook on their Long-term IDR is Negative in line with that of the sovereign.

According to Fitch, the downgrade of the three banks reflects Fitch’s assessment that the state’s ability to support its major banks has been reduced, as reflected in Cyprus’ sovereign downgrade.

The sovereign downgrade was largely based on Fitch’s revised baseline assessment of the potential cost of support the Cypriot banks could need from the state to cope with asset quality deterioration in Greece and Cyprus and reach a core capital ratio of 10%.

Fitch estimates that the Cypriot government may need to provide up to €6 billion of bank support (which includes the €1.8 billion to restore the capital base of the Cyprus Popular Bank). Fitch acknowledges that its estimates of the potential losses and capital needs of Cypriot banks are subject to considerable uncertainty and are conservative.

At the same time, the Viability Ratings (VR) of the Bank of Cyprus and the Hellenic Bank have been downgraded to ‘ccc’ from ‘b-‘ and removed from RWN reflecting Fitch’s belief that further capital needs are likely to be required in view of continued asset quality pressures in Greece and Cyprus. The Cyprus Popular Bank’s Viability Rating of ‘f’ has been affirmed to reflect its failure under Fitch’s definitions.

All three banks’ Short-term IDRs and Support Ratings have been affirmed and the RWN on the banks’ Support Ratings has been removed from RWN.

Fitch judges that the scope for further capital-raising from the private sector is limited and thus assumes that the capital is highly likely to be provided by the sovereign. To provide such support, in Fitch’s view, the sovereign will need to be assisted by international authorities, most likely an EFSF/ESM arrangement.

In Fitch’s view the propensity of the sovereign to support the three major Cypriot banks remains strong, despite the large fiscal pressure this would bring to the country.

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