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Αντώνης Λοΐζου, FRICS

Antonis Loizou & Associates  Chartered Surveyors

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We must help the financiers

9 October 2017

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So, here we are blaming the banks for everything, but are the financiers up to it to meet this unpredicted situation? Some financiers are trying to resolve the situation - see Bank of Cyprus which is still searching to find a way out of their own financial situation and the loss of the investment by the incoming new investors.

We are particularly worried for the Co-Op Bank which is troubled by the small politics of the parties, whereas other financiers seem to be doing little about the NPLs.

It will be a mistake to consider that our banks/financiers are doing okay, especially bearing in mind the increased strict standards that are introduced from time to time by the E.C. Bank.

We take this approach since we note now, that it is an election period, our MPs and political parties bid against each other who will offer the best reliefs to the debtors regardless.

We do not think that the ex Irish Banks investors expected what they are facing with now in Cyprus. We have a lot of discussion regarding the protection of the permanent residence (be it quite a humanitarian measure) but then we have expensive villas of the millions range, which nowadays have a very limited demand and most difficult sale prospects.

In order to be more in line with the prevailing situation we must not forget how we came about this disaster of 3/2013. Two main ones to blame, is the ex-Christofias Government (spend and spend) and the banks themselves who took all sorts of decisions regarding the Hellenic Bonds mainly and the Governor of the Central Bank at the time(s) that did not exercise their due diligence and supervision of the banks. End result the demolition of the Cyprus Popular Bank and the loss of the people’s deposits, as well as those (to a small extent) the Bank of Cyprus. So no doubt we have debtors unable to pay (the NPLs etc). So the banks are also to blame, be it that the existing shareholders of the Cypriot banks are the least to bear responsibility.

So, here we are blaming the banks for everything, but are the financiers up to it to meet this unpredicted situation? Some financiers are trying to resolve the situation - see Bank of Cyprus which is still searching to find a way out of their own financial situation and the loss of the investment by the incoming new investors.

We are particularly worried for the Co-Op Bank which is troubled by the small politics of the parties, whereas other financiers seem to be doing little about the NPLs.

Some of the foreign consultants that have been taken on board to handle the NPLs and sale of securities, notwithstanding their 6 month appointment are still not properly set up and time passes as nothing is happening.

  • Sale of NPLs
    It is a must since the financiers’ job is not to sell real estate but financing. An attempt has been made by the Bank of Cyprus of group sale, whereas the others are still at the preparation state.

  • Buyers Funding
    The taking over of projects/properties be it on an individual basis or otherwise is another option. An NPL say of €5.0 mil. which cannot sell, but given added funding on behalf of the financiers to complete the project under its own Co or the banks supervision is another solution provided it works financially.

  • Group Investments
    The group of attractive investments and the not so attractive ones as one sale is another option – Say sale of an attractive investment (property) for €3.0 mil. plus €500.000 for the not so attractive ones, is another option in order to get rid of the non-attractive properties.

  • Financiers Cooperation
    There are plots/land that are adjacent to each other, but are under mortgage by different financiers. Such properties, provided there is a cooperation by the various financiers could offer a better deal if sold as one. This is especially so regarding agricultural land in the Famagusta region, the wine producing villages (lack of land by the wine producers) can prove to be for everybody’s benefit.

  • Financing the new buyers
    Not a must as such but financing worthy new clients is a point in hand. The financiers have excess deposits which must be given out. Attractive terms and long repayment period is another solution which will help.

  • High end developments
    Must be watched most carefully by the financiers who in their effort to finance and based on the “boom” for such projects especially is worrying since as we have reported in the past the passport measure may not last for more than 1-2 years, especially after the recent E.U. warning and the intention of this Government to place new measures and restrictions.

  • Administration Quality
    Are the financiers up to the quality of the administration required regarding real estate? Based on our own experience they are not all to a satisfactory extent up to it. Many of the staff have limited experience how to handle real estate matters, whereas others are taking it easy, with no immediate response (shocking examples).

The real estate market will improve once the financiers improve themselves and the two go hand in hand and by knocking the banks we are knocking the Cyprus economy and the real estate market.

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