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An abominable legacy

Posted by (Author) on August 13th, 2014 - 81 Comments

In 2008, after failing to get its presidential candidate into round two of the Presidential elections, DIKO has done the unthinkable and backed Demetris Christofias a die-hard communist of limited ability to become the President of theRepublicofCyprus. Christofias’ five year reign has given Cyprus two explosions.  The first, a physical explosion, at Mari where thirteen people lost their lives and the main power station of the country at Vassilikos has been partially destroyed. The second was at the very foundations of the country’s economy which came about from the worst economic management of public sector finances and a near total lack of regulation and control of the banking system.

The banking crisis was blamed on Christofias and his lack of ability and unwillingness to take advice, although in truth, the banking bubble was brewing for some years even before Christofias came to power. As Bloomberg Businessweek wrote in a report on 21 March 2013, the problem was that “Cyprus’ two biggest banks couldn’t manage the flood of deposits [and] Cypriot regulators fell short as well”. Nevertheless, in polls conducted shortly before the end of his presidential term, Christofias was voted as the worst president to have held office since the foundation of the Republic.  Moreover, whenCyprus finally asked for a financial bailout in June 2012, President Christofias was guilty of stalling the negotiations as he was unwilling to accept measures such as privatization, thereby accentuating the economic problem and leaving a real mess to his successor to clean up.

Soon after being installed in power, taking over from the Christofias’ Government, the newly elected Anastassiades Government, found itself in dire straits regarding the state of the economy and the painful options that were laid out before it in the iniquitous Eurogroup of March 2013.  The new president, in his beloved method of “charm them and win them over” has tried his utmost to persuade our European partners and the World Bank representatives that no bail-in was necessary and that if we had to do something, we should be content to “tax” all the deposit holders (including those accounts with balances of under €100,000 which as the head of the State he was obliged to be the guarantor and protector of) with an across the board bail-in of 9.9%.  A curious number indeed, by the way.  It is as if some bigger force has mandated that a bail-in of higher than 10% would not be acceptable.

It was a taste of things to come for a Government and President that makes up policy by public relations.  The problem with such President of course is that he soon becomes vulnerable to organised interests who happen to have or can somehow secure access to the Presidential Palace.  Unfortunately, an over-confident president with a dominant and overwhelming personality but one who, as it seems, is also superficial and conniving in his approach, is liable to drive the country into new and bigger dangers and risks.  And this, I am afraid, is what may be happening right now.

The latest piece of presidential political mastery may have come about in the role the President may have played in the recent take over of our systemic banks by hedge funds.  For about six months, when I was a member of the Interim Board of the Bank of Cyprus, we have rebuffed hundreds of hedge funds who were trying every which way to enter through the back door and take over at greatly discounted prices the loan portfolio of the bank.  We have slammed the door because we very well knew that the bank (and the country) could not sustain such losses.  We also had a fairly good idea of how hedge funds operate.  They basically suck the blood out of governments and financial institutions in distress making themselves a quick huge profit and move on.  This is the last thing the after bail-in Cyprus needed.  A financial expert has characteristically recently commented, “We need hedge funds taking over our banks like we need the Ebola virus in Cyprus”. Of course, when one is at the edge of the cliff and about to fall down to a certain death he is perhaps willing and is wise to accept a parachute that is full of holes.  At least this way, he stands a chance to survive, be it at the cost of sustaining very serious injuries.  The question we should be asking, however, is why we have allowed ourselves to come to this point?  Why indeed a whole year has passed without taking any reconstructive measures both at the Government and Bank level?  The proposal to create a Development Bank to take the lead in the restructuring of major projects in the economy for example was quickly thrown in the recycle bin.

Typically, the current debacle has unfolded following reports of private meetings at the Presidential Palace with Mr. Hourican and some “prospective investors”.  Seemingly, as if the stage was set, soon enough we witnessed the parameters of the passing of control of ownership of the Bank to hedge funds rather clearly spelled out and mandated by the Central Bank and strongly supported by the Minister of Finance. The end result is that the hedge funds are now triumphantly, and as saviours, entering the Bank of Cyprus through the front door, but very suspiciously, via and courtesy of the Presidential Palace.

Our president, and in truth, most of our politicians who are now criticizing the new and totally necessary law for a legal framework that allows for a quick resolution in liquidating mortgaged assets that secure non-performing loans have once again failed to understand how hedge funds operate and what is really at risk.  As Mr. Hourican and the new boss at Bank of Cyprus Wilbur Ross were so quick to point out in articles in the local press, almost as if they were already prepared for it, it is not their intention to engage in an immediate selling off of mortgages.  I believe them.  In fact, the real threat is from selling the loan portfolio of the bank which will subsequently be packaged and sold to investors.  Indeed, if it was possible for investment banks to do this in the United States with packages of sub-prime loans, how easier would that be with well collateralised loans that are likely to appreciate in value in the next three to five years?  Moreover, this is not likely to take place until after the bank passes the stress tests and becomes a member of the new European Central Bank network of banks.  This way, it will be possible to sustain the losses the bank will inevitably incur from selling off their loan portfolio at hugely discounted prices as ECB and the Government of Cyprus will have to pick up the bill of recapitalising the bank once again.  Soon, after the selling off of the loans I expect the Hedge Funds will also sell off their shares in the bank and move on to “save” other distressed countries and financial institutions in the world.  The auctioning of the acquired mortgages will happen gradually in order to cover the interest due to bond holders with a major sell off happening perhaps in 3-5 years when, as they expect, the property prices inCyprus will recover and will thus generate a huge profit for them.

What is really at stake is that this wealth transfer will go outside Cyprus.  Even in the case where the Bank takes over the properties or of creating an Asset Management Company inCyprus, value would be preserved and remain to a large extent within the country.  This is the major risk our politicians must be aware of and should be thinking of ways to contain.  In my opinion, instead of asking for many changes to the new bill which are not even feasible let alone desirable, such as to compel the bank to settle the whole loan when it auctions a mortgaged property, our political leaders should try to understand what is likely to happen and think of ways to guard against or at the very least mitigate its impact on the people of Cyprus.  For example, a simple condition in the new law to be drafted making it illegal to sell off loan assets outside the Cyprus Banking system (a very reasonable condition based on the lender-borrower contract) will go a long way towards achieving this objective.

The bottom line is that a president who cannot judge the character and true intentions of people around him or assess the real situation of the country, and I may add, one that is evidently more concerned with his image rather than substance, is the worst that could have followed the “egocentric and incompetent” style of the previous president.  The country cannot survive consecutively two such presidents.  In fact, I don’t think any country can.

Savvakis C. Savvides is an economist, specialising in economic development and project financing.  He is a former senior manager at the Cyprus Development Bank and has been a regular visiting lecturer at Harvard University and more recently at Queen’s University, Canada. Author page:

Categories → Οικονομία

  1. avatar
    Dinos Constantinou on August 13, 2014 - (permalink)

    I hate what you say……………but unfortunately I agree 100%!
    Not easy to live in a country like this.

  2. avatar
    Savvakis Savvides on August 13, 2014 - (permalink)

    Thanks for the comment Dinos. I wrote this about a week ago and was thinking whether to publish or not. I hate the bitter truth of it too. But someone had to say it, so I decided to post it. I wrote it in English as I wanted people that don’t speak Greek to be able to read it too.

  3. avatar
    Anthony Dimitriou on August 13, 2014 - (permalink)

    Very well put Savvakis. Unfortunately no one with any influence, if indeed there are politicians with influence on this crappy Island, will read it let alone heed your warnings. We are left with populist decisions which will accelerate the downward spiral.

  4. avatar
    KKyriacou on August 13, 2014 - (permalink)

    Mr Savvides,
    I could not disagree with you more in your assessment of the situation and your opposition to foreign capital, hedge funds. You see, when you are in bed dying with Ebola, to use your own analogy, you do not have the luxury to turn a doctor away just because his medicine does not taste good or because he is expensive, as hedge funds might be. Nor you have plenty of time to contemplate how you got there. I am also puzzled that an economist of your statue that lectures at Harvard has such outdated beliefs as to passing laws that prevents profits from going to foreigners (or preventing the sale of loan portfolios outside the Cy banking system). Really, how else do you expect to attract badly needed foreign investment?

    Your reasoning also lacks basic economic reality that I suspect comes from your bias towards hedge funds, and your limited understanding of their profitability. I suspect that like many others, you believe that if a hedge fund buys a loan at 50% of its face value it gets a great bargain that will allow it to double its money. The truth is that the hedge fund will be happy to sell it at 60% and move on, but most of the times the fund will sit on that asset for years waiting for the economy to turn around, if it ever does in time for the investment make sense. Don’t take me wrong, hedge funds know their jobs and they are not doing anyone any favors, but they want to make sure that they are compensated for the risk they are taking i.e. that the economy may take years to recover and that in the meantime another Christofias or Tsipras comes to power with unimaginable consequences to their investment. In reality, most of these non-performing loans are worth only a fraction of their face value primarily because they are backed by collateral with overly inflated valuations, as various independent studies have shown. That means the banks are most likely sitting on unrealized losses. And just because, as a bank you do not realize the loss with the true value of the collateral (the one that the market is willing to pay), that does not mean the loss does not exist.

    One way to deal with the problem, is to keep those loans on balance sheet, mark them at the price YOU, or the banker that is safeguarding his job, thinks is right and pray for an economic recovery to come back and fill in the valuation gap (Your valuation vs. market). While some companies can afford to do that, in general troubled banks cannot, because of their special role in the overall economy as credit providers. Japan has tried that strategy with its own troubled banks and 20 years later, Japan is still waiting for the recovery. Spain, on the other hand, that open the doors to hedge funds, (and went out of its way to make sure they do not even pay taxes for bringing their money to Spain), has already started to recover. Ireland also chose a similar path to be accommodative to foreign capital, primarily hedge funds.

    Another alternative, is to wait for a strategic investor to come and save our precious bank. I hope that your recent experience as a board member of a bank has taught you that such an investor/unicorn is nowhere in sight. Further, there’s no assurance that if it shows up, its demands will be any milder than those of the hedge funds. In fact, given that they are profit driven institutions, chances are they will not be. Either of these alternative strategies will be successful in “saving” the banks from facing harsh economic realities from bad loans they made in the gogo years. One of those strategies may even eventually work. But it will take a lot of painful years that in the meantime will deprive the economy of badly needed credit and liquidity to get itgoing. So if I had a choice, I would prefer to have a much smaller healthy banking system, that the existing one “ebola”.

    Unless, you have any other ideas, I suggest you keep those hedge funds warm and make sure we do not insticate our politicials to pass any foolish changes in the law that will cause them to take their money elsewhere. A better solution, will be to follow Spain’s steps and make it way too easy for them to be there, and make them fight over the assets. That’s the surest way to get better pricing (again look at Spain / Ireland).

  5. avatar
    ... on August 13, 2014 - (permalink)

    I am perplexed by the article. The author argues that hedge funds should be avoided but at the same time admits, that, at this point, there was no better option.

    Of course, the author is right that other options were on the table a year ago. But these are no longer on the table and this forum has discussed them at length. No need to repeat these points.

    If Mr Savvides or others think that the hedge funds are buying cheap, they have the opportunity to use their own funds to participate in the capital issue in September. If they do not have the money for that, then that is exactly the point: beggars cannot be choosers.

    • avatar
      Savvakis Savvides on August 13, 2014 - (permalink)

      1. The main point the article makes is the handling (or perhaps I should say mishandling) of critical situations for the country by our political leaders over the years. This is why I am speaking about a dreadful legacy.

      2. I never said anywhere that Ebola is better than Hedge Funds. On the contrary, I say that now Hedge Funds may have become a necessary evil, (or a bitter pill we have to swallow if you prefer) and I quote what I said so that KKyriakou in particular can perhaps read it more carefully:

      “when one is at the edge of the cliff and about to fall down to a certain death he is perhaps willing and is wise to accept a parachute that is full of holes. At least this way, he stands a chance to survive, be it at the cost of sustaining very serious injuries. The question we should be asking, however, is why we have allowed ourselves to come to this point?”

      3. Most of the reforms that Troika insists on are necessary and long overdue. I have never argued anything else. What I am saying is, if our politicians had any basic understanding of how hedge funds operate they would not be proposing a series of “popular” but totally unworkable changes but rather they could seek to contain the cost to the country (at least for a while) by restricting the sale of loans outside the banking system. This is not unreasonable, although it is a legal issue. I don’t pretend to be an expert. To my understanding, it is as not easy as you may think to sell a private loan between a bank and its customers to any third parties (especially if these are not banks).

      4. Hedge funds by the way make a minimum of 30% profit on anything they touch (a case in point is Third Point – a major shareholder of Hellenic Bank – check their website if you like) and they don’t take such risks as you suggest. They calculate and plan carefully anything they get into. I guess that is highlighting my point, in that our politicians should be at least as prepared and studied as those who approach them are when they make deals that determine the fate of the country. A similar thing happened in Brussels in March 2013. Christofias has a long history of such gaffs (the gifting of €4.5 billion to Greece in the bail-out for example).

      5. My own opinion about hedge funds (operating in the so called financial liberalisation frame) in the world is that they are mostly unproductive and that they distort the real free economy causing a misallocation of resources. You can download and read my paper on “Financial markets, bloated governments and the misallocation of capital” from my author page if you want to know more what I think about the subject.

      • avatar
        KKyriacou on August 20, 2014 - (permalink)

        Mr. Savvides, it’s true that you are admitting that hedge funds may be the only option left. But at the same time you are making recommendations for changes to the law that would encourage them to go elsewhere, thus depriving Cyprus for that solution. You also go on to demonize the funds by characterizing them as “blood sucking” monsters, as if all hedge funds are the same. Either we like it or not Cyprus is a distressed play for investors, and as such the most likely capital to attract is distressed funds, looking for higher returns to be compensated for the risk their taking. And despite of what that YOU think that the loans are “well collateralized”, the Market simply does not seem to agree with you. If by any chance you are right about that, then funds will compete for those assets bidding up prices, and minimizing the losses for the banks.
        But one thing we should NOT do is to pass laws, of the kind that you suggest, that would encourage the funds to take their money elsewhere.

        • avatar
          Savvakis Savvides on August 20, 2014 - (permalink)

          Dear KKyriakou,

          First, I want stress once again that my article is about the sorry and miserable way that our political leadership treats critical decisions for the country. The hedge funds entrance is just a case in point. There is also the energy strategic decisions that seem to be taken behind closed doors and without too much thought and where the suppliers of the technology or even the demanders of the final product are totally prepared on presenting their case to us and we are more often than not unprepared and unstudied. The same thing seems to be happening with the investment decision on casinos. Where is the feasibility studies for any of these? How can we negotiate the best deal for the country if we are not at least as prepared as those who want to sell us something or in the case of the hedge funds, those that want to buy something from us.

          My own view about hedge is that they are counter productive and that they distort the allocation of capital into efficient economic uses. They operate in a largely unregulated environment and they are by no means strategic investors. This is why I don’t like what they do in particular. But as you say, I do admit that they may have become a necessary evil for us. My point about my suggestion regarding their ability to sell off the loans they acquire to just anyone is for containing and managing the impact that such an eventuality will have on the people of Cyprus. Between accepting everything they put on the table (which I am sure it will be totally to their advantage) and negotiating a better deal there is a lot of room for manoeuvre. I don’t think for example that restricting the free sale of loans to some groups of people or for some period of time will put the hedge funds off.

          I make no pretence that I don’t like what hedge funds are about. They have no scruples in executing their victims if the have to (like we see what they are doing in Argentina for example). This is why we need to be careful and if we have to, like it seems to be the case in Cyprus, invite them in, but make sure that not all terms and conditions are against us. Another simple thing that we could have negotiated for example is the ruling legislation under which any dispute may be adjudicated in the event of a dispute. If we just accept that American law will prevail for example we end up in a similar helpless situation that Argentina now finds itself.

          Be that as it may, I reiterate that my article is not about hedge funds (despite the fact that I don’t particularly like what they do in the world) but all about presidential and political incompetence. You know the saying: “if you don’t know where you are going any road takes you there”. This is so typical of our Government. That is why everything they do is perceived by them as success.

        • avatar
          Savvakis Savvides on August 20, 2014 - (permalink)

          By they way, I am not really convinced that markets can price the assets correctly as you say, to quote you “will compete for those assets bidding up prices”. This is not an open and free market situation any more. Those that will have secured the assets will have them exclusively. When they seek to sell them on they will make a profit, but not for the Bank, only for themselves. The bank will receive only the initial acquisition price that the purchasing hedge fund will acquire these assets. In a sense, this is already factored in the share price they had to pay to buy their equity position in the Bank. There is no guarantee that such an onward sale will happen under free market conditions, especially since the decision makers at BoC will be the interested parties themselves.

          • avatar
            KKyriacou on August 20, 2014 - (permalink)

            I am not privy to the information on the energy discussions so I cannot comment on that. But it goes without saying that we have to be well prepared to cut the best deal for Cyprus (and also avoid the mess that Argentina frankly created for itself). I am in full support of hard work and solid planning and preparation. And if we are not doing that shame on us. My disagreement with you is for the general role of hedge funds and the defenses you propose, which I find counterproductive. The jurisdiction again is another case in point. I doubt very much that funds will be willing to invest in Cyprus if the legal documents are drafted under local law. Investors, not just hedge funds, learnt the hard way that just does not work. They may take it, but they will charge you for it. Case in point with the Greek Government bonds; GGB under British law, demanded a much lower yield/(priced much better) than those under Greek law. It is no coincidence that UK and the US have the most developed capital markets; the law and the legal system has a lot to do with it. Also on the hedge funds (and let’s just agree to disagree on this), I am of the belief that even the worst of their kind, vulture finds, do play a useful role in establishing a market where there’s none, such a Cyprus. And once a market is established it is a different ball game. Again, when Spain started selling assets a few years back, returns were in the high teens to mid 20′s. Spain not only it did not discourage funds from coming in, it passed laws that allowed tax free profits on foreign funds. The result? Within a year returns have dropped to low teens, and in some cases to single digits, producing much better prices for banks and Sareb.

  6. avatar
    anonymous on August 13, 2014 - (permalink)

    “What is really at stake is that this wealth transfer will go outside Cyprus.”

    What a bunch of parochial non-sense! As a cypriot tax-payer I am thankful that hedge funds stepped in, otherwise, I would have to pay higher taxes to bail-out the BOCY. We did this with Laiki, and we saw where taxpayer-funded bail-outs got us. We will also do it with the Co-ops.

    Yes, hedge funds might make huge profits but they might also incur huge losses, especially in a political environment where paranoia is endemic. Higher risk, higher return. Unless, as a fomer board member of the BOCY, you think that the BOCY is a safe bet.

    Oh, and by the way, can you please tell me which projects the Cyprus Development Bank funded that were sound and profitable?

    • avatar
      Savvakis Savvides on August 13, 2014 - (permalink)

      1. Hedge Funds take a higher return but not necessarily by taking on a higher risk. (A case in point may be Argentina). See also my answer to KKyriakou above. If they were by they way, there is no way they would consistently exceed 30% return.
      2. CDB has led by example especially in the years after the invasion and has studied and financed most of the major projects that caused the economic miracle. I cannot name projects (it wouldn’t be right) but I would suggest that you get your facts right. I am talking of course of the Bank as it operated from the seventies to mid nineties.

      • avatar
        Andreas on August 14, 2014 - (permalink)

        From what you are saying Mr. Savvides, hedge funds should be the preferred investment for all investors since they make higher returns (consistently exceeding 30%!!!!) without taking on higher risk!
        I guess you have to step away from your books and take a better look at the real world.
        Hedge funds are nothing more than investment vehicles controlled by smart investment managers. If they are smart enough they will make consistent returns (not 30%!!, unless they are Madoff style) and build a successful track record to attract investors’ trust. They take calculated bets that may have higher chances of succeeding than your regular coin-toss or dart-throwing monkey. That’s all. They are not mean, aggressive, or hostile. They invest investors money for a return and they have to make wise decisions on where to place that money to make more money. There is no point in demonizing hedge fund unnecessarily.
        I also agree that we should invite such investments and our “politicians” should do their best to attract such savvy investors who will bring along some much needed expertise in this country and some proper corporate governance. We have all witnessed the “professionalism” of the cypriot banks and I personally prefer the hedge fund “vultures” as the media call them.
        I am even more perplexed when economists such as yourselves have just showed up on stage after the fact to point at all the bad things that have already happened without offering any real advice. Sadly, your comments on hedge funds only show the great dislocation between education and knowledge.

        • avatar
          Savvakis Savvides on August 14, 2014 - (permalink)

          Dear Andreas,

          You say, “Hedge funds are nothing more than investment vehicles controlled by smart investment managers” and then you contradict yourself by saying “I also agree that we should invite such investments and our “politicians” should do their best to attract such savvy investors who will bring along some much needed expertise in this country.” You totally confused me! Which is it? You have to make up your mind. Are they just investment fund managers “taking calculated bets” as you say or are they indeed experts on the subject and industries they invest in, that would make them long-term strategic investors? They can’t be both. I am pretty sure it is the former. And I agree with you that they take calculated bets. Moreover, they study the situation of the distressed country, bank, or company they “invest” into and make sure they have an early exit open and that the terms and conditions made prior to their “investment” are to their advantage. The main point of my article is not that I am dogmatically against hedge funds, although I repeat that in my opinion they are opportunistic investors seeking to make a buck for themselves and their clients any which way they can, but that our politicians do not do their homework when they meet these people behind closed doors and they basically agree to anything they put on the table.

          Since you also admit that hedge funds “take calculated bets that may have higher chances of succeeding”, can I ask you what you think they are after in investing in our banks? Do you think they expect that in the next 2-3 years they will turn things around and they will be rewarded for their investment by the profitability and high returns that the bank will generate? If you do, I am sorry to say that I am not the one who is naïve. If you agree with me however, and I hope you do, I ask you, how do you think they “calculate” to make their expected return in such short period? There is only one logical way to spare you too much thinking about it. Through raiding the balance sheet.

          You also remark off the cuff that “I am even more perplexed when economists such as yourselves have just showed up on stage after the fact..”. I don’t care to defend myself to you or anyone else for that matter but you are again very raw and too “eager” to shoot me down. Just for your information, I am not just an academic (I have been practicing what I preach for more than 30 years) and I have been saying the same things well before the crisis. You only have to check some of my comments at Stockwatch (using my real name even when I was a bank employee) when I was attacked by many for warning and talking against the so called Cyprus International Financial Centre miracle. Also, some of my papers calling to change our ways, were written well before the crisis (such as “Corporate Lending and Assessment of Credit Risk” and “Financial Markets, Bloated Governments and the Misallocation of Capital”). This, just to put the record straight. But you are entitled to your opinion. Only please, before you shoot, study a little what you are aiming at.

          • avatar
            Andreas on August 14, 2014 - (permalink)

            Dear Savvas,
            apologies for being too eager to judge. I only worry that “warnings” against hedge funds will only arm our naive politicians to go out and do more stupid things and block investments that we so desperately need in this country. Hedge funds are investment vehicles and they use a broad range of strategies. These can be long term or short term, opportunistic or strategic, regulatory opportunities or value driven. They can invest in equities or debt or combinations of the two. It is pointless to go into how many different flavors hedge funds may come in. In Cyprus they will invest because there is an opportunity to make returns that outweigh the risks (hence calculated bet). No investor would invest in bank of cyprus if there was no opportunity to make money. If that is through raiding the balance sheet, then it is our fault for not identifying the opportunity and doing it ourselves already. I believe though that the current investment is based on a more long term (2-3 year) expectation that the cyprus economy will improve and that BOC will stand to gain as the main financial institution in Cyprus. Furthermore, there is an expectation that the ECB will somehow have to provide liquidity in the Eurozone which will ultimately help Cyprus.
            All investors are looking for returns. Any investment has its risks. Hedge fund managers will take calculated bets that limit their downside while increase their upside potential. They are typically experts in the type of transaction they will make and not necessarily experts in the underlying industry but they will seldomly touch anything they do not fully understand. Unfortunately this is why Cyprus has managed to chase away all investors. We are governed by imbeciles who act without thinking and that is an unknown that investors are not willing to take.
            Please do ignore me and continue to warn against potential dangers that our economy may face and please do it more actively this time so that perhaps someone listens. But make claims that are right.Hedge funds do not offer 30% consistent returns and they are not out to get us. They are out to get a good return on their investment as we all should!

          • avatar
            Anonymous on August 14, 2014 - (permalink)

            I think the point is that there are losses to be absorbed, we need somebody with the capacity to absorb these losses, given current conditions that somebody will come from abroad, non-performing loans will be sold at a loss, not sure if the loss will exceed provisions with associated effects on regulatory capital, foreign investors will want to repatriate profits and asking them to reinvest locally will come at a cost (lower price, dilution costs for current equity holders if foreign investors invest in bank capital rather than assets), and a strategic investor is preferable to one who may divest from business lines/assets in a way that makes economic sense in the short-run, but which leaves the bank unable to perform its intermediation function effectively in the long run.

            The aggressive tone in some of the comments is just sad, and made even sadder by the fact that some of the comments come from people who seem to understand a thing or two about economics. This basic lack of civility is a trademark of our nation and we need to do away with it. A thing to keep in mind for those who just don’t seem to have been sufficiently exposed to the international arena, the quickest way to be deemed irrelevant in the economics profession is to substitute testosterone for sound, civil debating. You’ve seen people take their dogs out for a walk and when two dogs come across from each other it is often the case that a barking fight erupts. Who picks up the fight first? It is always the little dog…

          • avatar
            Savvakis Savvides on August 14, 2014 - (permalink)

            Dear Andreas,

            No offence taken. Thank you for your positive response to my comment. We all try to create a healthy discussion and help to establish the truth. But as anonymous points out, it is best to keep the tones down and concentrate in discussing each other’s points. As you probably know, I have published 4 articles in the last 2-3 months at Stockwatch. I wouldn’t if I was easily offended. I enjoy the discussion and try to respond to as many comments as possible. We all learn from each other.

  7. avatar
    Dinos Constantinou on August 13, 2014 - (permalink)

    There is nothing wrong if hedge funds come to make a profit or if a percentage of ownership goes overseas. The problem now is that we gave them the bank before we went to the sharholders to subscribe for the issue. Hedge funds come to make a killing if they are the financiers of last resort. Now, me as a Cypriot shareholder of BOC, my funds are blocked but I am not allowed to convert them into shares. The legal way is to first come to us the shareholders and if we can not fully cover then issue, then go to the hedge funds. For that part they can make 100% if they may. I became a shareholder by force and now that the price is lower I give my preemption right to the funds for free.

  8. avatar
    IoannisTakis on August 13, 2014 - (permalink)

    The following comment is written in Greek as i don’t care if people that that don’t speak Greek are not able to read our great “achievements” and “AD prophecies” and i am not referring to my compatriots Turkish Cypriots who are also suffering from their own politicians (Turkish or Turkish Cypriots).

    Η αναφορά του άρθρου σε ότι αφορά το πως φθάσαμε στην κατάρρευση της Κυπριακής οικονομίας είναι ακριβής σε ότι αφορά τις προσωπικές ευθύνες του πρώην και του νυν προέδρου αλλά ο αρθρογράφος παραλείπει να αναφερθεί με τον ίδιο παραστατικό τρόπο στις ΠΡΟΣΩΠΙΚΕΣ ΕΥΘΥΝΕΣ των 3 πρώην κεντρικών τραπεζιτών καθώς και των ανώτατων αξιωματούχων που είχαν υπό την ευθύνη τους την εποπτεία και την διοίκηση των δύο μεγάλων τραπεζών πέραν από μιας απλουστευμένης λογικής του Bloomberg που λέει ότι για την τραπεζική κρίση ευθύνεται η έλλειψη γνώσης για την ορθή διαχείριση των δισεκατομμυρίων ευρώ που μαζεύτηκαν «ξαφνικά» στο νησί. Είναι σαν να λέμε ότι ο δολοφόνος φταίει απλά επειδή «βρέθηκε» με ένα πιστόλι στο χέρι και όχι γιατί με τις ενέργειες του «σκότωσε» την οικονομία.

    Βεβαίως όλοι οι πιο πάνω (πολιτικοί, επόπτες και τραπεζίτες) δεν “έδρασαν” τόσο αχάπαρα ή δεν αντέδρασαν ως όφειλαν γιατί ήταν όλοι ηλίθιοι και ανίκανοι αλλά ακριβώς επειδή εξυπηρετούσαν ή επηρεάζονταν από την πίεση που ασκούσε σε αυτούς το γνωστό “αόρατο” κατεστημένο (μεγαλοεπιχειρηματιές, μεγαλοδικηγόροι, μεγάλα ελεγκτικό γραφεία, κ.λ.π.) που μας καταδυναστεύει τα τελευταία 60 τουλάχιστον χρόνια και ευθύνεται για το σημερινό μας κατάντημα είτε αυτό αφορά την διάλυση της οικονομίας, είτε την σμίκρυνση της μεσαίας τάξης, είτε την πτώχευση των ανθρώπων με χαμηλά εισοδήματα είτε γενικότερα για την δημιουργία μιας κοινωνίας χωρίς αρχές και όραμα για ένα καλύτερο μέλλον, η οποία έχει ξεχάσει τι σημαίνει αλληλεγγύη, δικαιοσύνη, αξιοκρατία αφού σχεδόν το κάθε μέλος της ενδιαφέρεται να ικανοποιήσει τα ιδιοτελή του πρόσκαιρα συμφέροντα αδιαφορώντας για το γενικότερο καλό και το μακροπρόθεσμο μέλλον των πολιτών και ευρύτερα της πατρίδας μας. Κάποιος μπορεί να ισχυριστεί ότι η εμπέδωση της “πατριωτικής” συνείδησης με ότι αυτή η έννοια περιλαμβάνει είναι κυρίως ευθύνη των πολιτικών και όχι των πολιτών αλλά αυτό δεν μπορεί να μας απαλλάσσει από τις δικές μας ευθύνες. Δυστυχώς, ο λόγος που συνεχίζουμε να ζούμε μέσα σε αυτήν την απογοητευτική κατάσταση είναι επειδή σχεδόν όλοι αυτοί που συνεχίζουν να μας κυβερνούν ακόμα και μετά την οικονομική τραγωδία είτε μέσα από δημόσια αξιώματα είτε μέσα από ιδιωτικούς «πύργους» είναι αυτοί που μας έφεραν σε αυτή την σαθρή κατάσταση.
    Κλείνοντας και σε ότι αφορά την αναφορά του άρθρου στην «κακά» που φέρνουν μαζί τους τα hedge funds που μόνο σκοπό έχουν… να απομυζούν το αίμα του κόσμου και τις εισηγήσεις για περιορισμό της δράσης τους η αντίθετη άποψη λέει ότι:
    1. Τα hedge funds δεν ήρθαν μόνα τους ούτε επειδή τα καλέσαμε εμείς η ο νυν πρόεδρος, αλλά επειδή είδαν μια επενδυτική ευκαιρία που προήλθε από την κάκιστη διαχείριση της Τράπεζας Κύπρου από τα προηγούμενα Δ/Σ και τον προηγούμενο Δκη της ΚΤΚ με όλες τις εγκληματικές «γκάφες» που είχε κάνει τόσο με τον ορισμό της PIMCO όσο και τον ορισμό των Μη-εξυπηρετούμενων και τις αυστηρές παραδοχές τους έδωσε και όλα όσα ακολούθησαν με την εκτόξευση των κεφαλαιακών αναγκών σε μια περίοδο ύφεσης, με την κρατικοποίηση και το κλείσιμο της Λαϊκής, τα κουρέματα, την ανακεφαλαιοποίηση της Πειραιώς με τα δικά μας λεφτά κ.λ.π.
    2. Ως φορολογούμενοι τυπικοί πολίτες ή/και καταθέτες προτιμούμε ένα ξένο επενδυτή να βάλει κεφάλαια σε μια τράπεζα παρά να πληρώνουμε εμείς φορολογίες για λάθη άλλων όπως συνέβηκε με τον συνεργατισμό και την Λαϊκή.
    3. Εάν οι υφιστάμενοι μέτοχοι ή άλλοι συμπεριλαμβανομένου και όλων εμάς έχουμε τα απαιτούμενα κεφάλαια και θέλουμε να αναλάβουμε το όποιο επενδυτικό ρίσκο ας εκδηλώναμε ενδιαφέρον για να βάλουμε εμείς τα κεφάλαια που υπολείπονταν για την ανακεφαλαιοποίηση της Τράπεζας Κύπρου.

    Υ.Σ.1 Επειδή είναι εύκολη η κριτική των πάντων και συχνά ο αρθρογράφος αναφέρεται στην εξάμηνη θητεία του στο προηγούμενο Δ/Σ της Τ.Κ. αφήνοντας να θεωρηθεί ότι αυτή ήταν επιτυχημένη να του υπενθυμίσω απλώς ότι μια ουσιαστική ενέργεια ανέλαβε να κάνει αυτό το συμβούλιο που αφορούσε το λεγόμενο «σχέδιο εθελούσιας μείωσης του προσωπικού» και αυτό το έκανε με τον πιο λανθασμένο τρόπο… αφού αντί πρώτα να καθορίσει τον μέγιστο αριθμό υπαλλήλων που χρειαζόταν (ας πούμε 2.500 και όχι 4.200 που είναι σήμερα) και τους μισθούς που μπορούσε να πληρώνει με βάση τα νέα δεδομένα αυτή η νέα Τ.Κ. και στην συνέχεια με αξιοκρατικά κριτήρια να κρατήσει τους καλύτερους (στην σχέση αξίας και μισθού) άνοιξε το σχέδιο για όλους και «κατάφερε» να χάσει αξιόλογα στελέχη και υπαλλήλους ενώ της έμεινε υπεράριθμο ποοσωπικό το οποίο σε αρκετές περιπτώσεις είναι ακριβό και ανεπαρκές.
    Υ.Σ. 2 Δεν γνωρίζω πότε ακριβώς ο αρθρογράφος διετέλεσε ως στέλεχος της Τράπεζας Αναπτύξεως αλλά αυτό που γνωρίζω είναι ότι οι νέοι Ρώσσοι μέτοχοι (και ας μην ονομάζονται Hedge Funds) της την «αγόρασαν» για κάποια σεντ αφού η αποτίμηση του χαρτοφυλακίου των δανείων που παραχωρούσαν τα στελέχη αυτής της τράπεζας κατέδειξε μείωση της αξίας αυτού του χαρτοφυλακίου γύρω στο 75%.

  9. avatar
    καχ on August 13, 2014 - (permalink)


    At this time the only potential investors are hedge funds so in my opinion they should be more than welcome.Contrary to what you suggest most hedge funds do not make a lot of money.You mention Third Point but of course it is one of the exceptions and past performance is not an indication of future performance.I agree that hedge funds take calculated risks .

    I strongly feel that the position of Nicolas Papadopoulos suggesting the new legal frame for foreclosure of mortgaged properties should apply to new agreements.In this way it is indefferent if loans are sold or not.This will make sure no legal issues arise.In any case banks will carefully select loans that are adequately provided so they do not suffer a big loss when they sell them.

  10. avatar
    Μ on August 13, 2014 - (permalink)

    Mr Savvides,

    In general I like your articles and the constructive discussion that they trigger. That being said, as also that I am not a huge fun of hedge funds either, I believe that their participation in our banking system will be as dangerous as the CBC will let it to be.

    At this stage we have kept the toxicity (and as it appears to some extent concentrate toxicity) on the bank’s balance sheet; something that in my view has simply kept the source of concentrate toxicity happy, led the IMF to point out that the NPL coverage in EU is 50%, whilst in Cyprus is 30% and perpetuated uncertainty.

    I find Mr Riza’s suggestion interesting and to me it appears to resemble the SPV established by NAMA. However I am not sure whether it could attract any conservative foreign investors in case that the acquisition of the NPLs is not at a reasonable discount or without an indicative bottom to the real estate prices that an orderly implementation of the foreclosures procedure (or the prospect of its implementation) could provide.

    I have read your suggestions for a Reconstruction and Development Bank in the past and if i may ask, I would appreciate a more detailed analysis of your thoughts. Could you please elaborate a bit more on your suggestion (capital structure, majority owned by whom? why would MFIs be interested? detailed analysis of the process envisaged according to your suggestions, etc).

    • avatar
      Μ on August 13, 2014 - (permalink)

      PS: A small correction; Sometimes your articles could trigger some non constructive comments as well… but I am sure that you can cope with that.

    • avatar
      Savvakis Savvides on August 13, 2014 - (permalink)

      I have to write this very quickly as I am supposed to be somewhere in a few minutes. Please forgive any mistakes of typos:

      The main need for a Development Bank type of institution is to try and save as many as possible projects that drive the engine of our economy and to formulate and finance new ones. To do that you need a professional organisation with the right training and expertise (mainly in project finance) to disentangle the complex web of loans that are currently funding our over-leveraged business enterprises. If you try to refinance an existing enterprise (in general I mean, I am sure there exceptions) you will find that a) the level of lending is extremely high b) that the collaterals given are owned by many banks and c) there are all sorts of other guarantees and undertakings tied to these loans (such as floating charges, personal guarantees, memos and so on). The above reality makes it almost impossible to try to rework and restructure the existing loans of corporates but in particular large conglomerates. Moreover, a bank will be impeding another to find a settlement because it may happen to have an advantageous position over the other (i.e. one may have a prior mortgage, or memo or may indeed use its floating to install a receiver manager and so on). Moreover, even if a bank decides to reschedule it own loan in all probability this bank will be at a disadvantageous position of another financier of the same bank who, for any reason, has also rescheduled its own loans to that client. These are just some of the factors that are impeding any real progress in the restructuring effort. Add to this, the fact that the existing loans burdening the business entities are so high that it is very hard to establish a good repayment capability, it is no surprise that progress will not come about unless and until a new approach is adopted. This approach is what I have referred to in previous writings as off-balance sheet finance of a new special purpose vehicle (SPV) where a bank or more often a number of banks join together under one loan agreement to finance the business on the basis of its cash flow and its ability to repay the new loan. It is to be understood that the existing resources and assets will be transferred to the new entity and in return the proceeds of the new loan will partly be used to repay the old loans for these assets. The main point, which I hope should be apparent by now, is that only a professional organisation can undertake the arrangement of such finance. This is what a good Reconstruction and Development Bank will be doing. In addition, it will provide its own financing (loans but also equity where necessary to make a project happen). Whatever, cannot be restructured and reconstructed in this manner will have to take the road of recovery and asset management.

      On your question about funding, Development Finance Institutions are funded by the Government and multilateral Financing institutions, such as EIB, EBRD, Kfw, IFC and so on. I am pretty sure that some of these organisations will be willing to participate in the bank’s equity as well as to provide lines of credit for onward lending.

      I have presented a full concept with numbers and funding when I proposed this idea to the Bank of Cyprus. The consultants were working on this idea a little before the Board was changed. I hope I have not confused you more. Because I wanted to give you an answer of some sort. It is not easy to explain or justify in a few words. I have a full presentation and personally, I am convinced that it is both necessary and feasible. Incidentally, I do not disagree with Mr. Riza on the idea of a NAMA and other such mechanisms. It serves another need to the one that the Dev. Bank is serving. The two are complementary. But first we need give a chance for many of the projects in our economy to be reconstructed and saved in order to avoid a deep depression.

    • avatar
      Erol Riza on August 13, 2014 - (permalink)

      Dear M

      I believe that we all wish that our banks are rehabilitated ASAP so that they can revert to the their role of lending so that the economy finds the liquidity needed. Thanks to the EuroGroup and the IMF has been dealt a very rough deal and Cyprus has not had the support other countries under an EU program had to recapitalize their banks. Let us not forget that closing the second largest bank, a forced merger and a bail in have caused a financial dislocation not seen in any country. The need to recapilise has arisen from the lack of a holistic solution to the banking system problems which were known for the last 12 months. This in part is due to the choice of internal bad banks but also to the outdated legal process in respect of foreclosure and insolvency. Hence these are steps which the government has committed itself and will have to take but this must be in a balanced way since the households and SMEs have to be protected.

      With regards to my past proposal it was based on the Spanish SAREB and which has some similarities with our problem loans. In the case of Spain the foreclosed assets were sold (transfer price) with a haircut of 64% and the non performing loans at 45%. You may draw your own conclusions at which price the comparable assets in Cyprus will be sold, if at all. This must reflect the economic value of the collateral and this is worked using discounted cash flows of future revenues.

      I agree that beggars cannot be choosers and Cyprus has had to face this choice twice; once in 2013 when the Presdient was threatened with closure of the two systemic banks from the Eurogroup and recently when the Cyprus banking has to pass the stress tests. ThenECB has been clear that banks had to,clean their,balance sheets or raise equity and we have seen massive capital funding in the EU. The banks had simply to be recpitalised. It so happens though that the depositors who were forcibly bailed in to save the. BoC have been dealt a hard blow but it would have been worse without the recap which the new investors bring.

      Hedge funds and private equity have been their worst enemy and in the UK they had to appear in front of a Parliamentary inquiry. As we speak the private equity owners of a care home are facing negative publicity due to their demands for salary cuts. Hence I would say that risk taking has to be rewarded but we must also be prepared for measures which the new owners may bring such as cuts of 25-35% in bank employee salaries and reduction of bank staff. Is this such a bad thing? No as I think,that banks in distress should have a cost to income ratio of less than 40%.

      Hence In future I would look at seeing better governance at banks and stricter supervision from the regulator. I think that the Single Sipervisory Mechanism, when it is introduced, will bring confidence back. In closing I would like to point out that in both Ireland and Spain the foreign investors were attracted after the creation of NAMA and SAREB and hence banks were better positioned. Also in both cases the existence of Real Estate Investment Trusts facilitated the investment. I believe that such a financial instrument should be introduced in Cyprus ASAP and these should include sector specific funds to give choice to investors

      • avatar
        Μ on August 14, 2014 - (permalink)

        Thank you both for your comments.

        Mr Savides,

        I understand that you cannot provide a detailed analysis in few words and clearly i cannot have a strong view based on fragmentary information; However as far as I understand a project like this, could accommodate only a number of cases that could either become viable or become viable after a large-scale reconstruction. The later begs the question whether the process could be affected by cronyism (and transform the reconstruction to an enormous one), as also whether it could create moral hazard, as non viable heavy borrowers could possibly forced become viable. One could argue that this could be considered as a reward to companies that have been profoundly mismanaged and consider as a preferable alternative to promote development by injecting these resources to new companies. Furthermore as far as I understand it will also create a need for new capital injection to the Banks and judging by the recent capital increase hedge funds are on the table again.

        Mr Riza,

        The Eurgroup’s decision was indeed a hard deal for us, but we cannot neglect the fact that our growth was based on an one-dimensional model, whilst other countries with over-leveraged banking systems such as Ireland have a different model. Exports have been and still is major contributory factor to the Irish economy. Therefore in my personal opinion a bail out would have created a chaos of a greater extent. Regarding your suggestion for sector specific funds, let’s hope so that the new AIF’s legislation will pave the way for some sector specific funds and management companies in Cyprus.

  11. avatar
    True on August 13, 2014 - (permalink)

    Dear Mr. Savvides,

    Thank you for your article. I am a little confused however by the following statement, which you made:

    “Moreover, this is not likely to take place until after the bank passes the stress tests and becomes a member of the new European Central Bank network of banks. This way, it will be possible to sustain the losses the bank will inevitably incur from selling off their loan portfolio at hugely discounted prices as ECB and the Government of Cyprus will have to pick up the bill of recapitalising the bank once again. ”

    It is my understanding that the real bill of recapitalization was picked up by innocent depositors, who saw their life’s savings stolen by the Cyprus government at the instructions of the ECB and European Commission. If there are additional needs for recapitalization, what prompts you to assume that the bill will be picked up by the government or the ECB? The government for one is borrowing money to stay afloat. The creditors of the government are not picking up any bill as they will be receiving their loans back with interest. Is it therefore fair assume that the bill will be picked up again by the depositors-turned-shareholders? Already they are being diluted and at a price of 24 cents a share they are witnessing their forced “investment” slashed into a quarter of their original principal.

    Can you please elaborate a little and share your thoughts on the matter?

    Another related question I have, if you don’t mind, is the issue regarding the recapitalization of SPE (Co-ops), which is indeed being picked up by the government, after the government was provided the required funds by troika. Why such different treatment between the two banks? It appears that SPE are receiving preferential treatment at the expense of BOCY and of course the ex Laiki. Any thoughts on that?

    • avatar
      Savvakis Savvides on August 13, 2014 - (permalink)

      It is not exactly clear to me either how the process of recapitalising will happen for those banks that pass the stress test and will be supervised directly from ECB. There is no way however that a systemic bank will be allowed to fail. Therefore, the cost of recapitalisation will be passed to depositors and/or tax payers (through their Governments).

      • avatar
        Erol Riza on August 14, 2014 - (permalink)


        I think that you may find the answer in the unwillingness of the ESM to recapitalize banks prior to the set up of the supervision of the ECB under the SSM; in the event the ESM did so under its Artilces it would do so via a loan to the government and hence you would be right. This is the reason the ESM has not come to the assistance of the Cyprus banking system in view of the additional debt which would be created. Post “banking union”,when the 128 banks which come under the regime of ECB surveillance, a direct recapitalization of the ESM will take place with the ESM taking an equity stake. At least this is my understanding.

        • avatar
          Savvakis Savvides on August 14, 2014 - (permalink)

          Thanks Erol for clarifying this. That fits into my “raw” understanding of how this new system will work.

  12. avatar
    GBU on August 14, 2014 - (permalink)

    Παρακαλώ πολύ, μπορεί κάποιος να μας εξηγήσει με απλά ελληνικά τη διαδικασία της εκποίησης της κατοικίας μας, αρχίζοντας από τη χρονική στιγμή που λαμβάνεται η τελεσίδικη απόφαση για την εκποίηση;
    Δηλαδή τι ακολουθεί; Θα μας στείλουν μια συστημένη επιστολή που θα βάζει διορία για να εγκαταλείψουμε το σπίτι μας εγώ, η γυναίκα μου και τα παιδιά μου, π.χ. μέσα σε 15 μέρες; Αν ναί, θα μου εξηγά η επιστολή ποιά πράγματα μπορούμε να πάρουμε μαζί μας; Δηλαδή κατάσχεται και ο οικιακός εξοπλισμός;
    Αν αρνηθούμε να φύγουμε ή αν καθυστερήσουμε και δεν φύγουμε μέσα στην προβλεπόμενη διορία τι θα μας κάνουν; Θα έρθει η αστυνομία; θα μας δείρουν; Θα μας σκοτώσουν; Θα μας βάλουν φυλακή; Τα μωρά τι θα τα κάνουν;
    Θέλω να ξέρω τι θα γίνει, πώς θα γίνει, από ποιούς θα γίνει και με ποιούς νόμους θα γίνει;
    Συνήθως η αστυνομία παρεμβαίνει δυναμικά όταν δεν εκτελείται απόφαση δικαστηρίου. Από όσα λέγονται, εκποιήσεις μπορούν να γίνονται και χωρίς απόφαση δικαστηρίου. Αν ναι, πώς θα επέμβει η αστυνομία; Και αν δεν επέμβει η αστυνομία τότε ποιός θα επέμβει;
    Αν από την άλλη δεν αρνηθούμε και φεύγουμε με τις οικογένειες μας, πού μπορούμε να πάμε; Ας πούμε ότι φέρνουμε εκεί ένα φορτηγό και το φορτώνουμε με τα πράματα μας, τουλάχιστο με τα βασικά: καρέκλες, κανένα τραπέζι, το ψυγείο, τα κρεβατάκια των μωρών και τα παιχνίδια τους, κ.α. Αφού τα φορτώσουμε στο φορτηγό, πού να πούμε του φορτηγατζιή να πάει; Αν είμαι άνεργος δεν θα μπορώ να νοικιάσω ούτε ένα μικρό διαμέρισμα. Θα υπάρχει κάποια κοινωνική πρόνοια όπως υπάρχει ας πούμε με τα κοινοτικά παντοπωλεία; Σκέφτομαι ότι μπορεί να είναι και χειμώνας (όλοι μιλάνε για εκποιήσεις από τον ερχόμενο Γεννάρη). Αν βρέχει εκείνη την ημέρα πού θα πάμε μέσα στη βροχή;
    Αλλά και αν δεν βρέχει, σκέφτομαι δεν θα μας κλέψουν οι κακοποιοί τη νύχτα που θα κοιμόμαστε στο πεζοδρόμιο όσα δεν μας έχουν κλέψει νομότυπα οι αρχηληστές;
    Επίσης, όσοι από εμάς είμαστε πρόσφυγες θα επιτρέπεται να πάμε στα κατεχόμενα;
    Μια τελευταία ερώτηση παρακαλώ: δικαιούμαστε να εγκατασταθούμε στο πεζοδρόμιο έξω από το σπίτι μας για να μη αλλάξουν τα παιδιά σχολείο ή πρέπει να πάμε μακρυά μέσα στα χωράφια; Μα ποια χωράφια; Ποιά είναι τα χωράφια που δικαιούται κάποιος να πάει;
    Τα γουρούνια τα σφάζουν προγραμματισμένα, σιγυρισμένα, με υγειονομεία, όμορφα και ωραία. Εμείς δεν θα τύχουμε ούτε της μεταχείρισης των γουρουνιών;
    Αυτά τα λίγα, αν μπορεί κάποιος Εμπειρογνώμων να συμβουλεύσει τον κόσμο (στα ελληνικά). Ξέρω, δεν θα πάρει κανείς το Νόμπελ οικονομικών απαντώντας τις ευτελέστατες αυτές ερωτήσεις και μάλιστα στα ελληνικά, αλλά η επιβίωση θα είναι πιο σημαντική από το Νόμπελ.
    Ευχαριστούμε προκαταβολικά.

  13. avatar
    Phylarchus on August 17, 2014 - (permalink)

    What I would like to mention is that not all hedge funds work the same way. The so called “vulture” hedge funds, operating preferentially i. e. in African and in some South American countries, do exactly whet Mr Savvides describes. Other hedge funds apply less provocative practices and invest mainly in cases where an urgent liquidity bottleneck appears, promising substantial but legitimate profits.
    In that sense and given the extreme need for cash for Cyprus’ s economy, it is not unreasonable to seek finance in the form of a new share issue addressed mainly to hedge funds, provided there are preconditions for the avoidance of a clash of interest between main share holders and possible future buyers of bank’ s assets. Similar measures should of course also apply in order to prohibit possible unholy deals between high ranking bank executives and future buyers of bank debts. One must fear, that where movements of large sums of money are involved corruption cannot be excluded.

    • avatar
      Savvakis Savvides on August 18, 2014 - (permalink)

      Dear Pylarchus,

      I agree with your comment and in fact I share the same concerns as you. I think, and I do say in fact rather clearly in my article, that where we are at, the hedge funds solution is perhaps the less harmful than other alternatives. My article was a about the dreadful treatment that critical decisions receive from our political leadership. This is why it begins with the Christofias era and continues with the current political leadership. The way that hedge funds have entered into our systemic banks is a case in point where it all happened, I suspect, behind closed doors but most importantly without having the right advice so as to mitigate and manage its negative effects, some of which are real concerns as you very correctly point out.

      The same approach has been used with the “effort” to attract foreign investment. Or even in critical decisions such as the energy decisions, the casino, and many others. There is no transparency, or even a single study done on the alternative investment scenarios which would identify and measure the risks from each alternative investment. To be a little more specific, we heard the story that we had decided that the best scenario for natural gas was to undertake a very major investment ourselves to turn the gas into liquid and store it so as to sell it to Far East countries (which happen to offer better prices – now). This is really shocking if one considers the huge up front investment we have to incur and the likely volatility of prices given the many changes in supply sources in this market. I heard that an Arab country (I think it was Qatar) who went down a similar road, told the Japanese and Koreans who were encouraging them to build these facilities (after carefully studying and measuring the possible impact of the risks involved) to come and build the plant and facilities themselves (thereby also undertaking the up front risk). How we have decided, and on the basis of what study that this is the best alternative for us is totally beyond me. I am bringing this as another example of what is supposed to be the main message of my article which is the continuing incompetency of our political leadership. It is a lot less about hedge funds (which like you I believe have become a necessary evil, which however as you point we need to understand manage as best we can). If we do not counter and discuss the terms and conditions these very shrewd people put on the table we may find ourselves in an even worse situation in the future.

  14. avatar
    Σάββας Τταντής on August 19, 2014 - (permalink)


    τα πράγματα είναι πολύ απλά και τα γράφω εδώ και 3 χρόνια. Οι αριθμοί δεν βγαίνουν , έχουμε πρόβλημα

    ΑΕΠ=17 δις.
    Τόκοι πληρωτέοι απο πραγματική οικονομία 4.5 δις κάθε έτος.
    Οικονομία δανεισμένη 350% του ΑΕΠ.

    Οι πιο πάνω αριθμοί μας λένε οτι η οικονομία έχει πρόβλημα και οτι είναι μια μη βιώσιμη “επειχήρηση”…..

    Συνολο κεφαλαίων (Συνεργατισμος. Κύπρου, Ελληνικη) 5 δις στην καλύτερη περίπτωση

    Εκποιήσεις στο 50% των αξιών , π.χ 10 δις δάνεια =5 δις ζημιές για τράπεζες .

    Δεν μένουν κεφάλαια για τράπεζες.

    Θεωρία τους Χάους οπως την έχω περιγράψει πολλές φορές μας απειλά. Συνεχίζουμε τα λάθη και τις θεωρίες.

    Η αλήθεια ειναι μπροστά μας και είναι τοσο καθαρή και δεν μπορούμε να την δούμε …..

    και ενα θετικό… μετά το χάος έρχεται η τάξης ORDO AB CHAO.

    Δεν είμαστε πάτο ακόμα . Πάμε νότια. Ανεργία πάνω απο 20%. Πολλές επειχηρήσεις θα κλείσουν. Ερχονται μεγάλα κοινωνικά προβλήματα….

    Σάββας Τταντής Χρηματιστής 19-8-2014

    • avatar
      Savvakis Savvides on August 19, 2014 - (permalink)

      Σε γενικές γραμμές ο κ. Τταντης είναι σωστός. Οι αριθμοί δεν λενε ψέματα. Μόνο οι άνθρωποι, και οι κυρίως οι Πολιτικοί λενε. Εξ άλλου αυτό ηταν και το πικρό συμπέρασμα του άρθρου μου «Ο υπερδανεισμός και η βιωσιμότητα του χρέους». Και εφόσον θέλουμε να μη βλέπουμε την πραγματικότητα γιατί προφανώς δεν μας αρέσει και οι λύσεις που επιδιώκουμε θα είναι λανθασμένες.

    • avatar
      Επιλήσμων on August 19, 2014 - (permalink)

      Αγαπητέ κ. Τταντή,

      Πραγματικά είστε η προσωποποίηση της Ομηρικής Κασσάνδρας.
      Τα προβλέπατε, τα λέγατε, και δεν σας πίστευαν.
      Στα νούμερα και τους αριθμούς, εκ των υστέρων λέγω ότι δεν είστε και πολύ μακριά. Σε αυτό που δεν συμφωνούσα μαζί σας, ήταν η κριτική που κάνατε σε κάποια πρόσωπα.
      Επίσης δεν συμφωνώ με την αισιόδοξη πρόβλεψη σας ότι μετά το Χάος έρχεται η Τάξη, τουλάχιστον γιά ότι αφορά την Κυπριακή οικονομία και την κυπριακή πραγματικότητα, συμπεριλαμβανομένης και της πολιτικής κατάστασης.
      Το ORDO AB CHAO έχει ακόμη δύο πολύ σημαντικές λέξεις που ακολουθούν: Ordo ab chao DEUS JUS. Δλδ, ο Θεός (Deus) επέφερε την τάξη και τον νόμο μέσα από το (ab – out of) χάος.
      Εκτός και εάν περιμένεις ο Θεός να βάλει το Χέρι Του και στην δική μας περίπτωση, διότι από μόνοι μας … .

      • avatar
        Νεφέλη on August 20, 2014 - (permalink)

        ” Η κριτική που κάνατε σε κάποια πρόσωπα ”,εννοώντας βεβαίως,μοναχά έναν, τον ανεκδιήγητο Δημητριάδη.

        • avatar
          Μ on August 20, 2014 - (permalink)

          Ναι Αθηνά – Νεφέλη η άλλως πως, αυτόν εννοεί. Απέκτησες και επιχειρήματα πέραν από νέο ψευδώνυμο? Το λεξιλόγιο έμεινε το ίδιο “Ανεκδιήγητος”, βρες κάποιες νέες λέξεις το ελληνικό λεξιλόγιο είναι τόσο πλούσιο.

          • avatar
            Νεφέλη on August 21, 2014 - (permalink)

            Είπα να τον αποκαλέσω ”αχάπαρο”,ή ”εντολοδόχο της Τρόικα και του Ντράγκι”,αλλά θα με αποκαλούσες προκατειλημμένη.Κατά τα άλλα,δε γνωρίζω καμιά Αθηνά.

          • avatar
            Μ on August 22, 2014 - (permalink)

            Ενδεχομένως τότε να είσαι κάποια φανατική αναγνώστρια των σχολίων του Επιλήσμονα, που αποφάσισε να σπάσει άξαφνα τη σιωπή της επαναλαμβάνοντας δις θέσεις που έχει εκφράσει στο παρελθόν άλλο πρόσωπο: “Ανεκδιήγητος” στις 9 Μαΐου 2014 στο και τις θεωρίες συνωμοσίας για Τρόικα-Ντράγκι-Δημητριάδη στις 30 Μαρτίου 2014 στο Κρίμα που δε γνωρίζεστε…δύο πρόσωπα που μιλούν σαν ένα θα μπορούσαν να αναπτύξουν κι′ άλλες θεωρίες συνωμοσίας.

          • avatar
            Νεφέλη on August 22, 2014 - (permalink)

            Φίλτατε Μ,για να μη διαμαρτύρεσαι,θα μπορούσα να χρησιμοποιήσω το αμφίσημο επίθετο ”ανεπανάληπτος”. Οσον αφορά το χρόνο που αφιέρωσες για να με ταυτοποιήσεις με άλλους σχολιογράφους του blog,απλά σ’ευχαριστώ.

          • avatar
            Μ on August 23, 2014 - (permalink)

            Το σχόλιο μου αφορούσε στην ξαφνική σου εμφάνιση και στην αποκωδικοποίηση των σχολίων του Επιλήσμονα. Δε σχολίασα εκ νέου τον αρχικό χαρακτηρισμό που χρησιμοποίησες ούτε τον επόμενο. Ξέρεις στο σημείο που ξεκινά η εμπάθεια και σταματούν τα επιχειρήματα δε χρειάζεται να πεις τίποτα, διότι θα είναι ανώφελο. Απλώς αφήνεις τον άλλο να εκτεθεί. Δε χρειάζεται να με ευχαριστείς, είμαστε παλιοί γνώριμοι με το alter ego σου και ως εκ τούτου δε χρειάστηκε να αφιερώσω χρόνο. Θα ήταν ίσως λιγότερος και από αυτόν που αφιέρωσες εσύ για να αποκωδικοποιήσεις σε ποιο πρόσωπο αναφερόταν ο Επιλήσμονας.

          • avatar
            Επιλήσμων on August 24, 2014 - (permalink)

            Αγαπητή Νεφέλη, (alter-ego της αγαπητής μου φίλης αθηνας),

            Θα μπορούσες να χρησιμοποιήσεις όποιο επίθετο επιθυμείς.
            Όμως το “ανεπανάληπτος” δεν είναι αμφίσημο επίθετο του “ανεκδιήγητος”. Εξάλλου δεν κατάλαβα τι πραγματικά εννοείς με την λέξη “αμφίσημο”.
            Αμφίσημος είναι αυτός που έχει διφορούμενη σημασία (αγγλ. ambiguous). Mήπως εννοούσες συνώνυμο επίθετο και προτίμησες το “αμφίσημο” which sounds grander?
            Μα και έτσι να είναι, ούτε συνώνυμα δεν είναι.
            Ανεκδιήγητος, αρχικά είχε τη σημασία του “απερίγραπτος”, “ανείπωτος”. Στη συνέχεια απέκτησε αρνητική/μειωτική/κακόσημο σημασία, “αχαρακτήριστος”, και ακολουθεί ουσιαστικόν πχ “…το ανεκδιήγητον μίσος που σε διακατέχει…”
            Ο “ανεπανάληπτος” βασικά είναι ο μοναδικός ή ο υπέροχος.

            Γιά περισσότερα, στον καθηγητή κ. Γ. Μπαμπινώτη.

          • avatar
            Νεφέλη on August 25, 2014 - (permalink)

            @Φίλε Μ, για να βρεις σχόλια της Αθηνάς,του Μάρτη και του Μάη,που να μοιάζουν με τα δικά μου,αφιέρωσες κάποιο χρόνο για τον οποίο και σε ευχαρίστησα. @Επιλήσμων,απλά δέν κατάλαβες.Χαρακτήρισα το επίθετο ”ανεπανάληπτος” ,ως αμφίσημο,με την έννοια ακριβώς που έχει.Διότι ανεπανάληπτοι ήταν,τόσο ο Καβάφης,όσο και ο Δημητριάδης.

  15. avatar
    Marios on August 19, 2014 - (permalink)

    I agree with the basic premise of the article that our Politicians and other persons of authority in the public sector have failed us in a big way.
    They are mostly incompetent.
    You would expect that after the big catastrophe of March 2013, things would have changed radically.
    Things changed a little especially in the beginning, but things have now got back almost to normal.
    I thing the most appropriate expression of how things work in Cyprus is expressed in a single word ‘Στο Περίπου’
    The most disharting event that the citizens have done is to vote for them again in the Euro Elections, increasing DYSI % and only penalising Akel a small %. It appears that many Cypriots get born supporting a particular party and vote for it for ever no matter what. Of course the citzens did not really have any choice. New parties that appeared recently in the Euro elections seem as incompetent and Λαικιστές as the rest of them.

    Things change only because Troika demands them. In the beginning at a faster pace and recently at a slower pace. But the changes are mostly done without real apatite for them. Time will only show that when Troika leaves whether we wil get back to our old ways.

    The above apply not only to Politicians but also to Top Civil Servants and Independent Officials. There are exceptions of course. Often someone in the public sector appears to be very Competent. But too often that’s because the yardstick is too low when compared with the rest. Compared with the Private sector or with Public Sector in other countries and you see the difference of competence.

    As in the past, the possibility of any improvements will only come from the Private Sector especially SMEs.

    Also in the past, most of the investment in Cyprus, say Hotels in the 1980s and 1990s were mostly from Cypriots. That kept profits in Cyprus and increased the overall standard of living of Cypriots.
    There is nothing wrong with Foreign Investment but it is of course a matter of decree and form of investment. It seems that huge chunks of Big Cyprus enterpises (banks, hotels, privatistations etc) will go to foreign hands in the form of equity. And I think this will happen in an excessive way. Future Profits will go out of Cyprus. Future standard of living of Cypriots will suffer because if this.

  16. avatar
    Nigel Howarth on August 21, 2014 - (permalink)

    Dear Mr Savvides

    Thank you for publishing your illuminating and somewhat provocative article in English, which I came across quite by chance this morning.

    If you have no objection, I would like to republish it (with full authentication to yourself) in my Cyprus Property News.


    Nigel Howarth

    • avatar
      Savvakis Savvides on August 21, 2014 - (permalink)

      Thank you for reading my article (and your kind words). I think that it is high time we all say and write with no fear the truth as we perceive it. Perhaps this way, we can hope that some time in the future our rather incompetent politicians that we elect in power will begin to take notice and change their ways. You have my consent to republish my article.

      • avatar
        Nigel Howarth on August 23, 2014 - (permalink)

        Thank you Mr Savvides. Hopefully more people will be encouraged to voice their concerns over what’s happening to Cyprus.

        • avatar
          Savvakis Savvides on August 25, 2014 - (permalink)

          Thanks for republishing my article. All the best.

    • avatar
      GBU on August 21, 2014 - (permalink)

      Please publish and the comments. Mine is ten “floors” “upstairs”, still awaiting for instructions. It is in Greek. It raises the question where should we go once our home is confiscated due to the fact that the system has stolen our salaries and wages, our jobs and our savings, thus rendering us incabable of reaying our mortgage loans (to those who have stolen our personal wealth). Now the question is somewhat different: how much do politicians, bankers and market-players underestimate the IQ of the avarage citizen? they are arguing that the banks will not proceed with massive sales of mortgages however, at the same time, they are pointing out that the loan portfolios of the banks will be sold to third-party funds, etc. As a consequence neither the politicians nor the bankers will be a part of the decision-making equation regarding foreclosures, etc, any more. if one is no longer a part of the decision-making mechanism how can he be committed that nothing massive is going to happen. This is a proof of how much they underestimate our IQ. Nevertheless, we are receiving exactly what we desserve!

      • avatar
        Nigel Howarth on August 23, 2014 - (permalink)

        @GBU – I believe it was Joseph de Maistre who said “Every country has the government it deserves”. But I wouldn’t say that the people of Cyprus got what they deserved.

        It was the banks and their reckless lending that resulted in the disastrous situation in which we find ourselves – what the PIMCO report into the island’s banking system politely referred to as “idiosyncratic features” that differentiate Cyprus from other international banking systems.

        The Central Bank of Cyprus either could not or would not control the lending spree of the banks – while President Catastrofias didn’t lift a finger to prevent the disaster that many saw coming in 2007.

        Speaking about the island’s property market in 2007 one estate agent said “Our economy is strong and we are attracting more buyers from foreign markets, not historically linked to us“. How wrong can you be?

  17. avatar
    Σάββας Τταντής on August 21, 2014 - (permalink)

    Αγαπητέ Επιλήσμων

    Θεωρώ οτι οι τράπεζίτες έχουν την ίδια ευθύνη για την καταστροφή της Κύπρου και ειδικά οι κεντρικοί τραπεζίτες έχουν την ιδια ακριβώς ευθύνη. Ειλικρινά απολογούμε εάν μέσω των άρθρων μου απέδωσα περισσότερη ευθύνη σε κάποιο απο τους τραπεζίτες.

    Οσο αφορά το Ordo Ab Chao , το προτιμώ οπως είναι λογο…Σκωτικου τυπου… IV-XXXIII. Εξάλλου ο κάθε άνθρωπος είναι ένας μικρός θέος , μόνοι μας θα βγούμε απο αυτήν την κρίση οπως μόνοι μας καταστρέψαμε αυτην την χώρα…..

  18. avatar
    Erol Riza on August 25, 2014 - (permalink)

    I hope the stakeholders who make decisions with regards to the law on the sale of NPLs have understood the implications of the ease of sale of NPLs, which the government has committed to, in the current economic and financial environment. I am in favor of such sales but the terms and timing has to be correct and it seems to me that the reference to securitization in the updated MOU is not quite the whole truth. We have not seen in any of the other progam countries any securitisation of real estate NPLs since securitization has been very expensive for the banks due to the risk retention rules which the regulators have imposed on banks after the financial crisis. This has made securitization very expensive for banks and herein lies all the efforts of the Bank of England and the ECB to find a way to get securitization off the ground.
    It thus means that, as we see in other countries, the portfolio of real estate loans will be sold by the banks when other efforts prove unfruitful and the buyers will be the usual suspects.
    The stakeholders should realize that this will continue to undermine the real estate prices and what that may mean to banks. There is no buyer who sees and hears what the proposals are for banks who will invest when the prices will go lower. The risks should obvious, even if the vulnerable housing loan owners are protected, as such sales will not stabilize the market in the next 12-24 months. We cannot change the forces of supply and demand in Cyprus.
    It is hardly surprising to me that despite the willingness of the Troika last year to consider a real estate investment bank to address the issue the whole political establishment killed the idea at its genesis without even allowing the business plan to be considered. We are now seeing the result of decisions made on emotion rather considered and mature thinking.
    I hope this week we will see such mature decision making as the risks to the financial sector, which were identified for the last 12 months, will be a reality. Unfortunately we have relied too much on the PIMCO adverse scenario being manageable and have not managed the NPLs since some thought they can reinvent the wheel. Vicky Price, a distinguished economist, in a recent article in the UK expressed her concerns about Greek banking with 30% NPLs. I wonder what she would think of Cyprus

    • avatar
      Savvakis Savvides on August 25, 2014 - (permalink)

      You make a good point Erol. The irony of it is that even now it would be possible to create an Asset Management Company solution (if there was a will). But something like that becomes even more difficult as it would scare away the hedge funds who are entering our banks with another plan in mind. An AMC would manage the assets for the long run and sustain/contain a price downslide. Moreover, it will maintain value within Cyprus to a large extent. But I am afraid that ship has sailed following one and half years of indecision and inactivity both at the bank and Government level.

      • avatar
        Επιλήσμων on August 26, 2014 - (permalink)

        Dear Savvakis,

        I would like to refer to your last paragraph, “…that ship has sailed folowing one and half years of indecision and inactivity…”.
        As you told us that you were a member of the interim Board of Directors of the Bank of Cyprus, (April – Sept. 2013), you must feel part of this indecision, so of course your twelve or so colleagues on the Board.
        The only excuse I can think of, is either the fear of ex-communication by our Archbishop or the wrath of President Anastasiades, perhaps both at once!
        With the benefit of hindsight, the Board should have proceeded with more bold moves.

        Τελειώνω με ένα ρητό με το οποίο πιστεύω θα συμφωνεί και ο φίλος Erol.
        “αδικεί πολλάκις ο μη ποιών τι, ου μόνον ο ποιών τι″.

        • avatar
          Savvakis Savvides on August 26, 2014 - (permalink)

          Dear Epilismon,
          The Interim Board acting on recommendations from the CEO (Sorotos), myself as Head of the Restructuring Committee and Erol as Vice Chairman and Head of the Risk Committee (among possibly others – I don’t remember exactly) adopted the idea for the need to split the Bank. The only difference of opinion between myself and the others was that I was insisting on the need to create a Development Bank rather than going directly to the AMC idea. But we needed to the support of the Central Bank who after consulting with the Troika have not dismissed it and asked us to examine this within the workings of the restructuring plan. But what has happened is that the Government was pushing for an early transfer of the Bank to its new shareholders. We needed to have at least until the end of September to complete the Restructuring Plan. Despite pleading to postpone the Annual General meeting until the Plan was completed, the Government insisted to do this when everything was still fluid. In fact, the Restructuring was completed quite some time after the new Board took over.

          I accept my collective responsibility as a Board Member for failing to achieve this. But there were quite a lot of mitigating circumstances. We introduced and promoted the idea. In fact, we have as a Board accepted that some kind of split for the Bank was needed. But fair point. We have failed to make it happen.

          I know you are joking, but as far as your comment about me being afraid of the Archbishop or the President (or both together), you should know by now this is not true. If there is one thing no one can accuse me of being guilty is having the courage to speak my mind. It never bothered me upsetting those in power, if I thought they deserved it.

          One final remark; when I say “inactivity and indecision” I am not referring to just the Bank’s Directors. It includes the Government, the Central Bank and not to forget the political leaders who kept interfering. You remember what happened when we first put this idea forward? The Archbishop, Averof and so many others attacked us as if we were giving the crown jewels away.

  19. avatar
    GBU on August 26, 2014 - (permalink)

    Αγαπητοί μου μπορεί να μη λήφθηκαν πολλές αποφάσεις αλλά λήφθηκε μια και καλή: να θυσιαστεί ο λαός για να σωθούν οι τράπεζες.
    By the way: ακόμη και ο σύνδεσμος δανειοληπτών συμφωνεί με τις εκποιήσεις των σπιτιών των μελών του! Τι αυτοθυσία Θεέ μου! Είναι σαν να λέμε ότι ο τραγικά δύσμοιρος James Foley συμφωνούσε με τον κτηνώδη αποκεφαλισμό του. Οι ειδήμονες λένε: αφήστε τις δυνάμεις της αγοράς, επιτέλους, να δουλέψουν! Αλήθεια; Καλά, και γιατί δεν αφήσαν τις δυνάμεις τις αγοράς να δουλέψουν και για τις τράπεζες; είναι οι δυνάμεις της αγοράς που έδωσαν 2 δισ ευρώ στη ΛαΙκή από τη τσέπη του φορολογούμενου; είναι οι δυνάμεις της αγοράς που έδωσαν 10 δισ ELA στη Λαϊκή; είναι οι δυνάμεις της αγοράς που φόρτωσαν τον ELA στην τράπεζα Κύπρου; Είναι οι δυνάμεις της αγοράς που χάρισαν τις τραπεζικές εργασίες στην Πειραιώς; είναι οι δυνάμεις της αγοράς που έδωσαν 300 εκ. ευρώ στην Κύπρου από την τσέπη του φορολογούμενου πολίτη; είναι οι δυνάμεις της αγοράς που διέγραψαν τα 2 δισ ευρώ μετοχές της Λαϊκής στην κατοχή του κράτους (του φορολογούμενου πολίτη), είναι οι δυνάμεις της αγοράς που έδωσαν 1,5 δισ ευρώ δάνειο στο συνεργατισμό πάνω στους ώμους του φορολογούμενου πολίτη; Αμάν πια αυτές οι δυνάμεις της αγοράς!

    • avatar
      Savvakis Savvides on August 27, 2014 - (permalink)

      Είναι η ανικανότητα των πολιτικών μας και η διαφθορά άλλων υψηλά ιστάμενων σε θέσεις κλειδιά και όχι η ελεύθερη αγορά που έδωσε όλα αυτά που λέγεις. Δεν είναι η ελεύθερη αγορά που ξεπούλησε τις Τράπεζες μας στην Ελλάδα. Ούτε είναι η ελεύθερη αγορά που έβαλε δισεκατομμύρια των φορολογουμένων για να σώσει μια Τράπεζα που ήταν είδη χαμένη. Δεν είναι η ελεύθερη αγορά που συμφώνησε στην απώλεια πολλών δισεκατομμυρίων για στήριξη του προγράμματος της Ελλάδας χωρίς να ζητήσει κανένα αντάλλαγμα. Δεν είναι η ελεύθερη αγορά που φταίει γιατί δεν γινόταν σωστή επιτήρηση των Τραπεζών.

      Παρεμπιπτόντως, η απόφαση να θυσιαστεί ο λαός μας έχει παρθεί χωρίς να γίνει γενικά αντιληπτό στις Βρυξέλλες τον Μάρτιο 2013. Τώρα απλά ζούμε τις επιπτώσεις αυτής της μυωπικής και τραγικής απόφασης. (Δες την απάντηση μου στο σχόλιο του κ. Τταντή πιο κάτω σχετικά με την επιλογή για μη περικοπή ξένων καταθέσεων για να μπορούν να διασωθούν οι επόμενες γενιές Κυπρίων).

      • avatar
        GBU on August 27, 2014 - (permalink)

        Χαίρομαι που συμφωνούμε. Επίσης συμφωνώ με τον κ. Τταντή και με την απάντηση σας στο σχόλιο του. Εδώ μάλιστα έχω και μια παρατήρηση: είναι άξιον απορίας πώς ένας χρηματιστής/ λογιστής όπως είναι ο κ. Τταντής, μπορεί και σκέφτεται και σαν οικονομολόγος ενώ οικονομολόγοι διεθνούς κύρους σκέφτονται μόνο λογιστικά (δηλαδή χωρίς να μπορούν να εισηγηθούν κατάλληλη οικονομική πολιτική για την έξοδο/ διαχείριση της κρίσης).
        Ευχαριστώ και πάλι.

  20. avatar
    Σάββας Τταντής on August 26, 2014 - (permalink)

    Η Ανάποδη Χώρα οπου Ολα είναι ανάποδα και Ολοι σκέφτονται Ανάποδα.

    Σήμερα είδα την ανακοίνωση του Συμβουλίου εθνικής Οικονομίας. Φρίκη, πανικοβλήθηκα.Τέτοιες αναλύσεις τις περίμενα και τις βλέπω μονον απο πολιτικούς, απο τα οικονομικά σαίνια της Κύπρου δεν τα περίμενα. Ενιωσα το ίδιο οπως ένιωθα οταν Ο Χαρίλαος μας έλεγε οτι η κρίση δεν θα μας αγγιξει, οταν έλεγε ο Στυλιανίδης οτι η Λαική έχει επενδυτές, οταν ο Δημητριαδης (πριν γινει διοικητής) ελεγε οτι το δευτερο εξάμηνο του 2012 πάμε για ανακαμψη…….

    Ολα ανάποδα Κυριοι, είμαστε η χώρα των ανάποδων. Μας είπε το Συμβούλιο των σοφών της Κύπρου οτι κυνδινευουν οι τράπεζες εαν δεν περάσει το νομοσχέδιο για τις εκποιήσεις……Κύριοι σοφοι, στην Κύπρο έχουμε 65 δις δάνεια και εάν πουληθούν 10 δις ακίνητα στο 50% της αξίας τους τοτε θα εχουμε 5 δις ζημιές για τις τράπεζες . Ολα τα κεφάλαια των τραπεζών μας ειναι μονον 5 δις……τις φαλιρισατε αμέσος.!!! θα τις χρεωκοπησετε σε 6 μήνες . ……

    εκτος του πιο πάνω τι γίνετε με τις αξιες των υποθηκών αυτών που πληρώνουν κανονικα? Οταν πουληθει ένα ακινητο π.χ στο χωριο Κιτι , στο 50% της αξιας του ποση ειναι η αξια του διπλανου σπιτιου το οποιο και αυτο έχει υποθήκη αλλα πληρώνει κανονικά? Η αξια του φυσικα ειναι οση πουληθηκε το διπλανο σπιτι. Εαν η υποθήκη ειναι μεγαλύτερη, η τράπεζα θα πρέπει να κάνει προνοια για την διαφορά μεταξυ της υποθηκης και της νεας μειωμένης αξιας του σπιτιου…….

    Κυριοι Σοφοι, εσεις θα αναγκάσετε τις τράπεζες να κάνουν προνοιες και για τα δάνεια τα οποια πληρώνονται κανονικα…..

    Κυριοι Σοφοι, 65 δις δάνεια χ 8% τοκοι = 5 δις τοκοι σε μια οικονομια που το ΑΕΠ της ειναι 17 δις και έχει ανεργια 20% ……..αναποδη οικονομική πολιτική, Ψηλα επιτοκια σε περίοδο υφεσης! Ελλειψη ρευστοτητας σε περιοδο υφεσης. Παλι ανάποδα……

    Νοιάζεστε για τις τράπεζες και ανησυχάτε για τα δάνεια και δεν ανησυχάτε για το γεγονος οτι υπάρχει 1 τραπεζιτης για κάθε 70 πολίτες ενω ο μεσος ορος θα έπρεπε να ειναι 1 ττραπεζιτης για κάθε 150 -200 πολιτες . Ξεχνάτε οτι έχουμε ενα κατάστημα τραπεζας για κάθε 1000 πολιτες ενω θα έπρεπε να εχουμε 1 κατάστημα για 2500-3000 πολιτες.

    Ξεχνατε οτι εχουμε τραπεζιτες που αμοιβονται περισσοτερα απο ένα υπουργο….

    Ξεχνατε οτι εχουμε τραπεζίτη που αμοιβετε 7 φορές περισσοτερο απο τον προεδρο της Δημοκρατιας…..

    Ξεχνάτε οτι ο Συνεργατισμος έχει 400 καταστήματα ενω θα έπρεπε να έχει 180 καταστήματα…..ποιος πληρώνει ολα αυτα τα ενοικια, τα ρευματα και τα άλλα έξοδα λειτουργιας αυτων των επιπλεον καταστηματων?

    Κύριοι οτι και να κάνετε , ειτε περάσει το νομοσχέδιο ειτε δεν περάσει αυτα που έρχονται θα ειναι σκληρά. 20 ερασιτέχνες κατάστρεψαν την οικονομία μας και άλλοι 20 ερασιτέχνες δεν ξέρουν πως να διαχειριστουν την σημερινή κατασταση.

    Η ανακοινωση του Συμβουλιου των σοφών μου θύμισε τον Ορφανιδη που ήξερε οτι πάνε για κουρεμα των Ελληνικών ομολογων και δεν ενημέρωσε τον Προεδρο Χριστοφια οτι οι τράπεζες δεν εχουν επαρκη κεφάλαια………Αυτοι σήμερα το ιδιο κάνουν ., Κυριοι ολα και ολα 5 δις κεφάλαια εχουνε οι τράπεζες…..Ξυπνάτε !!!

    Και τώρα που το ξαναβλέπω δεν ειναι 5 δις τα κεφάλαια των τραπεζών αλλά λιγότερα, ΔΕΝ έχει 1.5 δις κεφάλαια ο συνεργατισμος. Χαθηκαν τα κεφάλαια των φορολογουμένων οπως χαθηκαν και στην Λαικη.

    Κυριοι σοφοί αντι να ασχοληθήτε με το μεγάλο μας προβλημα που λεγετε Συνεργατισμος , αντι να ασχολειθητε με αυτο το μεγαλύτερο καρκινωμα της σημερινης οικονομιας μας ασχολειστε με τις εκποιησεις ακινήτων ???

    ποιος θα δώσει λεφτά στον συνεργατισμο κύριοι οταν συντομα (σε μερικους μηνες )θα χρειαστει κεφάλαια? Το κράτος και παλι?. Οχι Κυριοι αυτην τη φορα δεν θα τους αφήσει η Τροικα? Επενδυτης? Ποιος θα αγοράσει αυτη την αθλια διαχειριση Κύριοι? Κύριοι μιλάμε για το 30% της οικονομιας μας………..

    Κύριοι δεν ειμαστε ακόμα στον πάτο. Πάνε νότια. Οσο ανεργούμε ανάποδα θα πηγαινουμε νότια…

    Ειμαστε χειροτεροι απο τους σκλάβους του Πλάτωνα στην αλληγορία της Σπηλιας . Εκεινοι (οι σκλάβοι) δεν ειχαν γνωρίσει τον έξω κόσμο, ενω εμεις παρόλο που είδαμε στον έξω κοσμο παρόμοιες κρίσεις οπως της Αμερικής το 2008, της Ιρλανδιας το 2009, της Ισλανδιας το 2008 , της Ελλάδας το 2009 , εμεις συνέχιζουμε να εχουμε την ιδια συμπεριφορα με τους αλυσοδεμένους του Πλάτωνα……

    Ειμαστε μια τραγωδια…..

    Σάββας Τταντης , Χρηματιστής/Λογιστης 26/8/2014

    • avatar
      Savvakis Savvides on August 27, 2014 - (permalink)

      I am sorry to have to make this comment as it would likely offend some of the members of the Economic Council who happen to be also my friends. I find more wisdom in the short note provided by Mr Ttantis than in the whole report presented by the Council. At least Mr Ttantis identifies what are the real pressing facts facing our collapsed economy. I said before and I repeat once again, numbers do not lie. People do. Politicians in particular. Now, I have to add perhaps that academics either do not grasp what is the real problem or they choose to produce reports that do not offend or criticise the politicians. Moreover, perhaps not surprisingly, they base their recommendations on sectoral analysis, which to say the least, is not very helpful in the dire circumstances the country is in. Their recommendations are standard text book tax and subsidy and so on designed to encourage investments and all that crap. The least I expected was that you would have at least considered the real funding problem and that you were to suggest some way to overcome it. Also, may I ask why you do not recommend the creation of a Development Bank to reconstruct and provide finance from multi-lateral financing institutions for new projects to be defined from the release of economic resources from the failed and over-leveraged portfolio of loans of the banks?

      The numbers Mr Ttantis is providing are scary but true. Do you guys have any answers or advice on how to overcome these realities? We and our banks, thanks to the brilliance of our President and his advisors in Brussels in March 2013 have crystallised an enormous amount of deposits (a huge part of which were foreign) and at the same time condemned future generations of Cypriots in decades of misery in an economy that is faltering to come up with miracles in order squeeze out of them the cash to pay off those deposits. The deposits are on the one hand, cast in stone and on the other the loans in an over-leveraged and crumbling economy are deteriorating steadily. The gap is expanding and will continue to expand indefinitely until the blood transfusions to the banking system will dry up. Then what? The day is nearer than we all dare to think. Credit to Mr Ttantis for daring to think. I wish I could say the same about the Economic Council.

    • avatar
      Επιλήσμων on August 27, 2014 - (permalink)

      Αγαπητέ κ. Τταντή,

      Χωρίς να προσποιούμαι τον ειδήμονα, νομίζω ότι παρ’ όλο που θεωρητικά αυτά που γράφετε πολύ πιθανό να είναι ή να ακούγοντε ορθά, στην πράξη μερικά υστερούν. Ειδικά στο θέμα του Μνημονίου.

      Από την στιγμή που αποφασίσαμε και σχεδόν όλοι συμφωνούν ότι πρέπει να είμαστε και να παραμείνουμε μέλος της ΕΕ και εντός του ευρώ, τότε η υπογραφή του Μνημονίου ήταν αναγκαία (πες το αναγκαίο κακό, εάν κάνει κάποιους να αισθάνονται καλύτερα).
      Αρκετοί καθηγητές που αρθρογραφούσαν, θυμάμαι τον κ. Ζαχαριάδη, καθώς και μερικοί απλοί σχολιαστές εδώ στο blog, εμού συμπεριλαμβανομένου, προέτρεπαν γιά την έγκαιρη υπογραφή του Μνημονίου από τον τέως πρόεδρο Χριστόφια.
      Η ψυχολογία του κ. Χριστόφια, δυστυχώς γιά όλους μας, δεν του επέτρεψε να προχωρήσει στην υπογραφή. Με τις καθυστερήσεις εκ μέρους του, η θητεία του έφθανε στο τέλος της, και η Τρόικα σίγουρα δεν θα ήθελε πλέον την υπογραφή ενός Προέδρου που σε λίγο θα ήταν παρελθόν. Παρεμπιπτόντως, αυτός πιστεώ είναι και ο λόγος που ο τέως Διοικητής απέτρεπε την άτακτο χρεωκόπηση της Λαϊκής, μέχρι την υπογραφή του Μνημονίου, και όχι γιά τους λόγους που ακούσαμε και ακόμη ακούμε από διάφορους “ειδήμονες” επί των τραπεζικών. (Joseph Goebbels lives!).

      Το νομοσχέδιο που θα πάει στη Βουλή την Δευτέρα, δεν αφορά κάποιο καινούργιο Μνημόνιο. Είναι μέρος του Μνημονίου και των συμφωνιών με την Τρόικα. Μήπως θέλουμε μιάν επανάληψη του “μαύρου” Eurogroup με τους επαχθής και τιμωρητικούς όρους που μας επέβαλαν τότε γιά να “φέρουμε τον νού μας”?

      Λες, “… εάν πουληθούν 10 δις ακίνητα στο 50% της αξίας τους, τότε έχουμε 5 δις ζημιές για τις τράπεζες … θα τις (τράπεζες) χρεωκοπήσετε σε 6 μήνες,,,”.
      Θέλω να πιστώσω τις νέες και επερχόμενες Διοικήσεις των τραπεζών μας με περισσότερη κοινή λογική. Εκτός και εάν έχουν τάσεις αυτοκαταστροφής.

      Δεχτήκαμε το Μνημόνιο με την Τρόικα, σκεφτείτε το σαν να έχουμε επιβιβαστεί σε ένα αεροπλάνο. Δεν υπαρχει όπισθεν κίνηση, ούτε φυσικά και χειρόφρενο. Εάν κατά την διάρκεια της πτήσης αποφασίσετε ότι δεν σας αρέσει ο προορισμός, τότε ελπίζω να έχετε αλεξίπτωτα, ή να έχετε την δεξιότητα να πραγματοποιήσετε καταναγκαστική προσγείωση στο μέσο του πουθενά.

      Συμφωνώ με την άποψη σας ότι τα δανειστικά επιτόκια 8% είναι απαράδεκτα, γιά να μην πω τοκογλυφικά. 18 μήνες μετά το Eurogroup, οι τράπεζες όφειλαν να είχαν αναπροσαρμόσει τα επιτόκια τους. Δανειστικά όχι πέραν του 4% και καταθετικά 1.25 – 1.50%.

      Συμφωνώ και με αυτά που λέτε γιά τον υπεράριθμο υπαλληλικό προσωπικό που εργοδοτούν οι τράπεζες και τον υπερβολικό αριθμό καταστημάτων που επιμένουν να διατηρούν.

      Τέλος, συμφωνώ ότι διατηρούμεν νότια πορεία.

    • avatar
      Anonymous on August 29, 2014 - (permalink)

      Το Συμβούλιο λέει ότι πρέπει να περάσει ο νόμος για τις εκποιήσεις γιατί, απ’ ότι καταλαβαίνω, αυτό προσδίδει μεγαλύτερη αξία στις υποθήκες, έτσι οι τράπεζες θα έχουν μικρότερες ανάγκες για ανακεφαλαιοποίηση. Ο τρόπος που θα γίνουν εκποιήσεις από τις τράπεζες, φαντάζομαι θα είναι επιλεκτικός. Το μόνο που προστατεύει τώρα τους δανειολήπτες είναι η αργοκίνητη γραφειοκρατία στα δικαστήρια και το κτηματολόγιο. Δεν είναι παράλογο να βάζουμε μπροστά αργοκίνητη γραφειοκρατία για να προστατεύουμε ευάλωτες ομάδες; Αυτό και αν είναι ανάποδη λογική. Λογικά θα έπρεπε όλα να γίνονται γρήγορα και η προστασία να έρχεται μέσα από θεσμούς προστασίας καταναλωτή-δανειολήπτη, στεγαστικά προγράμματα κλπ

  21. avatar
    Erol Riza on August 27, 2014 - (permalink)

    Dear Savva,

    I had come to the conclusion, having researched the issue of NPLs across countries and studying the IMF paper and Vienna initiative, that the banks facing financial distress were not the best entities to asset manage the NPLs. In Cyprus we had a particular issue that was these NPLs were significantly linked with real estate, very much like Ireland and Spain. The legal road was not the recommended as banks have regulatory capital issues and the judicial process was time consuming.

    It was abundantly clear to me that the best interest of the bank, and the economy at large (unemployment and interest rates) that the bank had to get rid off these NPLS. Banks are not the best real estate asset mangers and if one looks at the EU experience the biggest buyers have been private equity with real estate expertise. By their very nature NPLs linked to real estate require time and hence all AMC or NAMA like agencies asset manage the loans bought and sell over time. This has been the case of Ireland and Spain and soon in Portugal following the BES resolution.

    The stakeholders in Cyprus have not understood that NPLs come in waves and this was the experience in Ireland and Slovenia as very clearly explained by the two experts which were invited to provide their views and who became acquainted with the Cyprus NP, problems last August. No one needed their advice and in Cyprus we have seen NPLs, by virtue of the EBA definition climb to the levels we now see.

    Whilst it was difficult last year to set up the AMC due to the deficiency in provisions the banks had a better opportunity to consider this and as suggested in my interview the Government had to ask for ESM support. One appreciates that the debt sustainability which the IMF champions could have been an obstacle but the €1bln cushion for the Co Op could have been supplemented by the ESM to have a banking system AMC. The objections of the IMF should not be keeping Cyprus a hostage to further support from the ESM. The comments of GBU above are absolutely correct that we cannot depend on the market forces as all these decisions are at the political level.

    The experiment with three internal bad banks has not delivered and in fact is the cause of all the problems of high interest rates, in erasing NPLs and social concerns about foreclosure which they are trying to address by law. The stakeholders have to look at what has been tried and successful in other program countries and not seek to reinvent the wheel. The real estate market requires time to recover and not threats of foreclosure and perhaps the boards of banks should have real estate experts from overseas to advise. We have no idea what advisors have come up but the threat of foreclosure and insolvency has not been the solution. What we have seen in other countries are AMC or state sponsored banks and large sales of portfolio of loans. The sales of loan portfolios is inevitable and one has to look at the Cushman ad Wakefield report on real estate asset sales for Q1 2014. The market in Cyprus is illiquid and not comparable this any foreclosure or sales will have a negative impact on future prices; supply and demand forces. Thus the view I held and still maintain is that only an entity that is not in a hurry and has no provision requirements is best suited to handle such asset management. The key are the losses which will be crystallized form the sale of NPLs and how the ESM can support Cyprus. The banking system is better placed to face these losses as it is better capitalized than last year.

    • avatar
      Μ on August 28, 2014 - (permalink)

      Mr Riza,

      I couldn’t agree with you more on that the banks need to get rid of the NPLs (in an orderly fashion) and as I have previously mentioned, I believe that they shouldn’t have kept them for more than a year on their balance sheets. I wonder why the early transfer of the BOCY to its new shareholders was so crucial for some. In my opinion the bank should have been delivered to its new shareholders once the restructuring plan was finalised, approved and started to be implemented.

      Indeed the real estate market requires time to recover; but it needs to find a price bottom first. In my opinion the market in Cyprus is illiquid because buyers are waiting for a price floor, whilst sellers are not willing (or motivated) to sell at a lower price (than they expected to sell). I believe that uncertainty and stagnation will be alleviated once a price bottom is determined.

      As you know foreclosure (or the thread of foreclosure and insolvency) has been one of the tools utilised in other countries and particularly in Spain, where 20% of the assets incorporated in SAREB’s portfolio at its initiation was of foreclosed properties. In case that we adopt a similar measure to SAREB or NAMA, a new capital injection will be necessary that the State will not be able to provide. I don’t believe that IMF’s hesitation is irrational though, since the additional fiscal measures required could possibly create further macroeconomic deterioration (maybe we could bear the burden of 1-2 more bn). In case that the NPLs will be transferred in an orderly fashion I believe that the bank(s) will be able to manage the situation and possibly proceed with a new capital increase. Apparently there was a gigantic black hole in our banking system.

      • avatar
        Erol Riza on August 28, 2014 - (permalink)

        Dear M

        Agree with most of what you comment. The one cost would be worth the benefits since NPLs require a different treatment. Cyprus deserves more support from the ESM and I do hope after October we will see a better management of the NPL problem as the legal road is not one used of preferred. The mere threat of foreclosure or insolvency may not be enough.

      • avatar
        Savvakis Savvides on August 28, 2014 - (permalink)

        Dear M,

        On your comment “In my opinion the bank should have been delivered to its new shareholders once the restructuring plan was finalised, approved and started to be implemented”:

        You can’t believe how I and my colleagues at the Board insisted to allow us to finish and deliver the Restructuring Plan in order to give something to the new shareholders to commit to. No one wanted to hear. It was politics over economics. The Government had an agenda to deliver the Bank to its new shareholders as early as possible and nothing else mattered. Which is really the main point I am trying to make in my article. How poorly and miserably vital decisions about the country are been taken at the top political level. We have been cursed to have the worst political leaders in the World.

        To my understanding, the Restructuring Plan was changed drastically from where we were driving it to go. Just to give you one example, we have directed the consultants to estimate how much personnel the Bank needs on the basis of functionality and efficiency rather than on the basi of broad European bank ratios (which are not anything like our banks as they are involved in so many activities) which seemed to justify a much higher number of employees. With the efficiency and optimum functionality calculation and taking into consideration the bank’s competitiveness I was estimating that a substantially bigger number than 100-200 employees in a few years would have been required to be released and included in the Business Plan. There would also be a feasibility study for the Development Bank/AMC concept. That was dropped as well. Overall, if I understand correctly as I have not seen the final version, the Restructuring Plan deviated in more than 10 crucial areas after the transition of power.

        • avatar
          Μ on August 31, 2014 - (permalink)

          Mr. Savvides,

          I can imagine. What I couldn’t believe during that period was my ears (still can’t sometimes) and how certain things were becoming of the utmost importance.

    • avatar
      KKyriacou on August 29, 2014 - (permalink)

      Good points, but unfortunately none of these solutions work without the “threat of foreclosure” in place. Even SAREB that has the luxury of 15 years to dispose of the assets would not be nearly as successful had it not been for the relatively efficient foreclosure process. Anyone buying NPLs has to incorporate foreclosure timeline in their pricing models and as I am sure you understand there’s a huge discount in price an investor is willing to pay, if that process takes 6 yrs vs. 2 yrs. This in turn results in a much lower transfer price from the bank’s balance sheet, therefore a bigger capital gap that it will need to cover. I also believe that the argument that there’s going to be an excess supply of properties in case of foreclosures is overstated. This is because it is to the best interest of the investor that ends up buying an NPL portfolio to prevent real estate prices from falling to rock bottom. So unless the investor is on a suicide mission he will try to prevent prices from falling to rock bottom levels, by disposing assets over time thus taking the role of the AMC you suggest. The challenge will be to find buyers for the big areas of undeveloped land that banks now own.

  22. avatar
    Σάββας Τταντής on August 27, 2014 - (permalink)

    Dear Mr Savvides

    thank you very much for your kind words. I totally agree with you, numbers never make a mistake. Its simple mathematics.

    Αγαπητέ Επιλήσμων δεν μίλησα για το μνημόνιο στο προηγούμενο άρθρο. Αλλά μιας και αναφέρθηκες σε αυτο….Απο τον Μαρτιο του 2013 λέω συνεχώς οτι στο μνημονιο θα έπρεπε να υπάρξουν και προγράμματα ανάπτυξης. Κανένα προγραμμα ανάπτυξης. Μονον αποκοπές οι οποιες οδηγούν σε έλλειψη ρευστοτητας στην αγορα , σε μεγαλύτερη ύφεση και κατεπέκταση σε ένα φαυλο κύκλο.

    Για αυτον τον φαυλο κύκλο μιλούσα απο 2011 πριν καν αυτος ξεκινήσει…..

    Τελειώνοντας επισύρω την προσοχή στο άρθρο που δημοσιευσα πολλές φορές με τίτλο Η ΘΕΩΡΙΑ ΤΟΥ ΧΑΟΥΣ.

    Ευχομαι σε όλους καλο κουράγιο και δύναμη……

    Σάββας Τταντης 27-8-2014

    • avatar
      Economist on August 28, 2014 - (permalink)

      Just to inform Mr Ttantis, that the revised MOU actually includes a provision at the end, that the Government has to prepare a growth strategy. As known, Mr Petrides (yfipourgos para to proedro) has already started preparing something on it with his team.

      PS: With the new foreclosure Law, it will happen to come and see (tha ginei to ela na deis). Implementation a la carte.

      Ex mandarin.

  23. avatar
    Savvakis Savvides on August 28, 2014 - (permalink)

    Η αναδιάρθρωση κάποιου δανείου προϋποθέτει ότι ο δανειζόμενος ή το έργο που χρηματοδοτεί το δάνειο μπορεί λογικά και μέσα στα πλαίσια μιας σωστής αξιολόγησης να θεωρηθεί βιώσιμο. Και εδώ έγκειται το τεράστιο πρόβλημα που σχεδόν όλοι οι πολιτικοί αλλά και άλλοι ειδήμονες δεν αντιλαμβάνονται ή ακόμη χειρότερα, διαλέγουν να παραβλέπουν. Με δεδομένο ότι η υπέρογκη ρευστότητα που προέκυψε από τη χειρότερη ίσως διαχείριση των τραπεζών και των άλλων γνωστών πλέον παραγόντων της καταστροφής έχει διοχετευθεί σε καταναλωτικά και μη παραγωγικά δάνεια πόσες από αυτές τις αξιολογήσεις που έχουν σκοπό την αναδιάρθρωση μπορεί να περιμένουμε ότι θα είναι βιώσιμες. Δεν αναφέρομαι καν στην συνεχώς διολίσθησαν κατάσταση της οικονομίας. Εάν δε, κάποιος λάβει υπόψη το πρωτοφανές επίπεδο του υπερδανεισμού στον ιδιωτικό τομέα (300%+ το ΑΕΠ) μου φαίνεται ότι για μια ακόμα φορά δεν κάμνουμε σωστή εκτίμηση του προβλήματος και ασχολούμαστε με την προσφιλή μας τέχνη της παραπλάνησης της κοινής γνώμης. Ή αν προτιμάτε μια ιατρική αναλογία, ο ασθενής πάσχει από καρκίνο και συζητούμε μόνο για το πιο είδος ασπιρίνης πρέπει να του προσφέρουμε.

  24. avatar
    Phylarchus on August 29, 2014 - (permalink)

    Νομίζω ότι το πρόβλημα είναι πιο περίπλοκο απ’ ότι μερικοί, είτε από ανησυχία μέχρι αγωνία, είτε από φόβο ή και έλλειψη ψυχραιμίας παρουσιάζουν. Για παράδειγμα γιατί δεν υπολογίζει κανείς τα κέρδη, τα οποία επί τόσα χρόνια έβγαζαν οι μεγαλοδανειστές κυρίως στο εξωτερικό και τες τεράστιες επενδύσεις που εις βάρος της εξυπηρέτησης των δανείων τους έκαναν εκεί; Αρκεί να θυμηθούμε ότι μερικοί κάτοχοι εισηγμένων εταιρειών ξενοδοχείων επί πέραν των τριάντα χρόνων από τη μια δήλωναν ζημιές και ουδέποτε πλήρωναν μέρισμα, ενώ από την άλλη έχτιζαν και άλλα ξενοδοχεία αβέρτα! Άσε που γέμισαν τα ελληνικά νησιά και όχι μόνο, με τα υποστατικά τους. Αυτοί θα πρέπει να είναι βλάκες, που δεν είναι, αν αφήσουν να ξεπουληθούν τα κυπριακά τους ακίνητα από τράπεζες σε χαμηλές τιμές όταν μπορούν να εισάξουν συνάλλαγμα. Επίσης να μη ξεχνάμε ότι, με όλη την ασυδοσία στην έγκριση δανείων, τα ακίνητα και πριν την κρίση γινόντουσαν αποδεκτά για υποθήκες στο 50-70% της αξίας τους, έτσι που οι ζημιές για τις τράπεζες από τις ρευστοποιήσεις δεν θα είναι τόσο υπερβολικές όσο παρουσιάζονται πιο πάνω. Επίσης να ληφθεί υπόψη η αύξηση του πληθωρισμού, που ήδη άρχισε να διαφαίνεται και να αντανακλάται μερικώς στα ακίνητα. Δεν θέλω καθόλου να στρουθοκαμηλίζω, τα πράγματα δεν είναι ρόδινα, ούτε όμως και να κασσανδρολογώ – είναι καιρός να σκύψουμε και να ριχτούμε όλοι στη σκληρή δουλειά για την ανάκαμψη – έχουμε περάσει και πολύ χειρότερα.

  25. avatar
    Επιλήσμων on September 1, 2014 - (permalink)

    Σε συνέντευξη του ( εφημ. Αλήθεια 10.8.2014 και Φιλελεύθερο 30.8.2014) ο καθηγητής κ. Σταύρος Ζένιος, εισηγείται ότι χρειαζόμαστε ένα είδος “κυπριακό σεισάχθεια” όπως γινόταν στην αρχαιότητα.
    (Σημ. “σεισάχθεια = αποτίναξη των βαρών, ενν. των χρεών).

    Δεν διαφωνώ με τον κ. Ζένιο, αλλά δεν είναι αναγκαίον να προστρέξουμε στην αρχαία Αθήνα και τον Σόλωνα με την γνωστή ρύθμιση των χρεών που με αυτόν τον νόμον απελευθερώθηκαν οι δούλοι. (Πριν την σεισάχθεια, ένας πολίτης με NPL έχανε την ελευθερία του και μετατρεπόταν σε δούλο).

    Σε σχόλιο μου εδώ στο blog ημ. 28.7.2014 (άρθρο του κ. Δ. Γεωργιάδη) “Γιά εκποιήσεις ενυπόθηκων ακινήτων” αναφέρω περιληπτικά τον “ΝΟΜΟ ΠΕΡΙ ΑΝΑΚΟΥΦΙΣΕΩΣ ΤΩΝ ΓΕΩΡΓΩΝ ΧΡΕΩΣΤΩΝ” που θέσπισαν στην Κύπρο οι Άγγλοι το 1940. Ένας νόμος που πραγματικά βοήθησε και έσωσε από την οικονομική καταστροφή και απώλεια της κατοικίας και/ή της γης τους, χιλιάδες Κύπριους γεωργούς από δάνεια που δεν μπορούσαν να ξεπληρώσουν κυρίως λόγω επαχθών όρων που επέβαλλαν οι δανειστές τους.

    Σήμερα δεν έχουμε γεωργούς αλλά δανειολήπτες κύριας/πρώτης κατοικίας και άτομα με μειωμένο εισόδημα και ενυπόθηκα δάνεια που κινδυνεύουν με εκποίηση. Ο νόμος των Άγγλων του 1940 μπορεί να χρησιμοποιηθεί ως πρότυπο. Οι πολιτικοί και βουλευτές μας δεν καλούνται να εφεύρουν τον τροχό. Όμως υπάρχουν οι πολιτικές σκοπιμότητες. Πχ, διαβάστε το άρθρο “Dangerous advice from a spiritual father”, Cyprus Mail, 31.08.2014, htpp://
    Σίγουρα υπάρχουν και άλλα παραδείγματα.
    Θυμήθηκα το τραγούδι του Αντύπα “Γιά τα λεφτά τα κάνεις όλα”, που γιά κάποιους τραπεζίτες ίσχυε, αλλά γιά τους πολιτικούς πρέπει να το αλλάξουμε λίγο: “Γιά την καρέκλα τα κάνεις όλα”.

    • avatar
      Anonymous on September 1, 2014 - (permalink)

      As always, spot on, Mr Epilismon.

      I was also fascinated by the Cyprus mail yesterday, not just the article you allude to but also the editorial and coffee shop commentaries as well as the article about the CBCs debacle with FBME. By the way the article about the spiritual father is also published in Greek in yesterday’s Politis. It’s an eye opener.

    • avatar
      Savvakis Savvides on September 1, 2014 - (permalink)

      Αγαπητέ Επιλήσμων,

      Σίγουρα χρειάζονται διαγραφές διότι δεν μπορούν να εξυπηρετηθούν τα δάνεια (είναι τόσα πολλά σε σχέση με τα εισοδήματα του κόσμου). Είναι απλά μαθηματικά, όπως μας λεει συχνά και ο φίλος μας ο κ. Τταντής. Αυτή είναι η πικρή πραγματικότητα που όμως σχεδόν όλοι μας διαλέγουμε να αγνοούμε και να παραβλέπουμε. Πρώτοι και καλύτεροι, οι πολιτικοί μας. Για να γίνει κάτι σαν αυτό που λέγεις χρειάζεται διορατική πολιτική ηγεσία. Αυτοί που έχουμε στην εξουσια, δεν αντιλαμβάνονται το πρόβλημα, πόσο μάλλον να βρουν και να πάρουν πρωτοβουλίες για ευφάνταστες λύσεις.

  26. avatar
    Jim Leontiades on September 1, 2014 - (permalink)

    Good article Savvakis – and about time someone said it. Of course, there is nothing wrong with foreign investment or hedgefunds -far from it. But the role of banks in the economy makes them special. Most countries restrict foreign ownership in certain industries eg. ports, military equipment producers, communications, etc.. Putting the issue of hedge funds to one side, Cyprus is the only country I know in which all the major banks are foreign controlled

    Jim Leontiades.

    • avatar
      Savvakis Savvides on September 1, 2014 - (permalink)

      Thanks Jim. It was much easier writing the article than it was publishing it. But as you say, I felt that it was time someone did. The fact that I do not particularly like the role hedge funds play in the world should not really be allowed to distract the reader from what is meant to be the main message of the article. And that is, the dreadful way that critical decisions about the country are being met by our political leaders. I am very worried about the lack of transparency and unpreparedness by which strategic decisions on the energy alternatives are taken. The same goes with the way we have approached the introduction of casinos in Cyprus, in our negotiations with our European partners on how they could and should help us to overcome the crisis, the total dismissal of the idea to create a development bank, and so on and so forth. Everywhere you look, it seems that politics always take precedence to economics and good common sense (which in Cyprus is not very common any more). And the country goes steadily from bad to worse…

  27. avatar
    Costas Nichael on September 1, 2014 - (permalink)

    Please Mr Savvides read the Orfanides interview and stop trying to be clever.!!!

    . Cypriot banks hold a sizeable quan
    tity of Greek debt
    . How damaging or
    potentially damaging could that exposure be? Could the Central Bank have
    taken any steps to limit banks exposure to a single borrower?
    With respect to the exposure of Cypriot ba
    nks to Greek debt, we have examined the
    situation and we have come to
    the conclusion that even thou
    gh there is exposure in our
    banking system, that exposure is manage
    able because our banks are very well
    So even in the highly unlikely situation, if you wanted to run the counter factual, for
    example, of imposing losses on the holdings
    of Greek debt, our banks would manage to
    weather that. To understand how well capitalised our banking system is, a comparison may be useful.
    Our banks already meet the stri
    cter capital requirements that
    are being phased in under
    Basel III. By contrast, in some other member
    states in the euro
    area there have been
    explicit calculations about how much additional capital would need to be infused into
    banking systems in order to meet those requ
    irements. This is testament to the very
    strong capital position of our banking system.
    Regarding steps to limit exposure by any of our banks to any sovereign holdings in the
    euro area, as part of the supervisory proce
    ss of the Central Bank of Cyprus we demand
    that all of our banks have good risk manageme
    nt systems in place. Of course, we do not
    control the specific decisions on portfolio holdings of banks. Whenever we determine
    that there is undue concentratio
    n of risks then we demand that
    additional capital be held
    in order to account for these risks. Th
    is way we manage risks to the system.

    • avatar
      Μ on September 2, 2014 - (permalink)


      Had the exposure been manageable, the banks would have managed to absorb the losses and/or proceed with capital raising, without seeking for government support. Had the requirements of the CBC been strict enough, there would not have been created a mess of cross-collateralisation and understatement of NPLs (since a piece of land was enough for a loan to be categorised as performing, even though it was overdue for several months or years). Had the CBC (adequately) managed the risk inherent (particularly) in GGB, it would have proceeded with the SRP, as per the provisions of the CRD, it would have required additional capital to be held for this exposure and it would have rendered the investment impossible. Had Orphanides done a good job, he would have delivered a robust banking system instead of a crumbling one.

  28. avatar
    Σάββας Τταντής on September 4, 2014 - (permalink)

    Προς Γενικό Εισαγγελέα και ανακριτές για τα σκάνδαλα των τραπεζών

    ΛΑΙΚΗ -Πώς έκλεψαν και παραπλάνησαν τους μετόχους της Λαικής και πως πουλησαν νέες μετοχές σε άλλη εταιρεία με ένα κόλπο….. . Η μεγαλύτερη απάτη που έγινε στις Τράπεζες μας…..

    1)-Η Λαϊκή τον Δεκέμβριο του 2006 αγόρασε το 97% μιας εταιρείας συνδεδεμένη με τον Βγενόπουλο για 1612 εκ ευρω πληρώνοντας 750 εκ Υπεραξία/ Αέρα, την Marfin Financial Group.
    2)- Η πιο πάνω εταιρεία είχε μια 100% θυγατρική, την Τράπεζα Μαρφίν . Αρα Η ΛΑικη έμμεσα κατείχε στην Τράπεζα Μαρφιν 97% του κεφαλαίου της . (Μέσω της Marfin Financial group)
    3)- 7/1/2007 μόνον 2 εβδομάδες μετά που αγοράστηκε η MFG , η Λαϊκή αγόρασε την θυγατρική της θυγατρικής της , την Τράπεζα Μαρφιν για 616 εκ….. Κανένα πρόβλημα εώς εδώ αφού αυτή η πράξη μπορεί να χαρακτηριστεί ώς αναδιοργάνωση. Έπιασε από την θυγατρική της την Τράπεζα Μαρφιν και της έδωσε μετρητά. Τα μετρητά αυτά ανήκουν έμμεσα και πάλι στην Λαικη αφού η Λαική κατέχει το 97% της…..τώρα έπρεπε να γίνει το κόλπο …
    4) – το 2007, Την ιδια ώρα που η Λαική έκανε την πιο πάνω πράξη , η MFG έκανε αύξηση μετοχικού κεφαλαίου και η συμμετοχή της Λαικής έπεσε από το 97% στο 6.44% μόνον. Αρα τα μετρητά που έδωσε η Λαική στην MFG τα πήραν οι νέοι μέτοχοι της MFG και όχι η ΛΑΙΚΗ. Η ΜFG μετονομάστηκε σε ΜΙΓ ……..

    5) Γιατί έγινε η πιο πάνω πράξη? Ποιο ήταν το κίνητρο? το Κίνητρο δεν ήταν τα 616 εκ μόνον ΑΛΛΑ κάτι ακόμα μεγαλύτερο ……….η ΜΙΓ όπως ανάφερα πιο πάνω θα έκανε αύξηση μετοχικού κεφαλαίου κατά 5 δις !!!

    Ηθελε να δείξει κέρδη για να πουληθούν οι μετοχές της. Η ΜΙΓ το 2007 ΔΕΝ είχε κέρδη και για να δημιουργήσει κέρδη Ξεφόρτωσε την θυγατρική της Τράπεζα Μαφριν στην Λαικη με 340 εκ Κερδος ! (πουλήθηκε για 616 εκ ενώ η εσωτερική της αξία ήταν μόνον 268 εκ ευρω)
    Έτσι η ΜΙΓ έδειξε κέρδη πούλησε τι μετοχές της, πήρε 5 δις από διάφορους μέτοχους και πήρε και 616 εκ από την Λαικη!!!!
    Με μια κίνηση τα πήραν απο ΟΛΟΥΣ!!!

    Δημιούργησαν κέρδη ξεφορτώνοντας στην Λαικη μια Εταιρεία η οποία ΤΗΣ ΑΝΗΚΕ!! Ηταν δική της ! της ξαναπούλησαν κάτι το οποίο ήταν ιδη δικό της! Δημιούργησαν κέρδη σε μια εταιρεία που δέν είχε άλλα κέρδη, πούλησαν τις μετοχές της, πήραν 5 δις ….!

    Η ΠΑΡΟΥΣΙΑΣΗ ΣΤΑ ΒΙΒΛΙΑ ΤΗΣ ΛΑΙΚΗΣ –Η συνέχεια του κόλπου……..

    To πιο πάνω τέχνασμα έπρεπε να καλυφθεί μέσα από τα βιβλία της Λαικής αφού η Λαική από την πιο πάνω πράξη είχε μια ζημιά τουλάχιστον 490 εκ ευρώ ως ακολούθος…
    Κόστος επένδυσης στην Marfin Financial Group 1612 εκ ευρω.
    Μείον Μέρισμα που είσπραξε από την πιο πάνω επένδυση (810) εκ ευρω
    Αξία επένδυσης που έμεινε στην Marfin Fin. Group (MIG) (350) εκ ευρω
    (6.44% της ΜΙΓ βλέπε σημείο 4 πιο πάνω )
    Ζημιά Λαικής από την επένδυση στην Marfin Financial Group 452 εκ ευρω

    Η Λαική έπαθε σε έξι μόνον μήνες ζημιά από την επένδυση στην Marfin Financial group περίπου 452εκ ευρω. Αυτή η ζημιά θα έπρεπε να διαγραφεί από τον λογαριασμό αποτελεσμάτων του 2007. Αυτό δεν έγινε ποτέ. Μάλιστα η ζημιά είναι επιβεβαιωμένη/πραγματοποιημένη (realised) αφού το τελευταίο ποσοστό(6.44%) που κατείχε η Λαική στην Mig πουλήθηκε τον Δεκέμβριο του 2007 για περίπου 350 εκ όπως το έχω υπολογισμένο πιο πάνω…

    Όπως ανέφερα πιο πάνω η ζημιά των 452 εκ που επέστησε η Λαική Δεν διαγράφηκε στα αποτελέσματα του 2007 αλλά μεταφέρθηκε και προστέθηκε ως κόστος Επένδυσης στην άλλη θυγατρική (Marfin Bank ) που πούλησαν στην Λαική με έμμεσο τρόπο 2 φορές! (βλέπε σημείο 5 πιο πάνω) . Δείxνανε στα Βιβλία της λαικής το κόστος επένδυσης στην Marfin Bank στα (616 εκ +452 εκ ) 1068 εκ , μια εταιρεία που είχε εσωτερική αξία μόνον 268 εκ !! (βλέπε ανάλυση πιο κάτω)

    Δεν υπάρχει λογιστικό πρότυπο που να επιτρέπει μια ζημιά να γίνετε επένδυση! Και μάλιστα μια ζημιά από ένα περιουσιακό στοιχείο (θυγατρική ) να μεταφέρετε ως επένδυση σε ένα άλλο περιουσιακό στοιχείο.

    Ο πιο πάνω λογιστικός χειρισμός είναι παράνομος και παράτυπος και ανήθικος. Εγινε εκ του πονηρού έτσι ώστε η ζημιά των 452 εκατομμυρίων να μην διαγραφεί στα αποτελέσματα του 2007 έτσι ώστε να μην παρουσιάσει ζημιές η Λαική . Αντί ζημιές η Λαική το 2007 έδειχνε αυξημένα κέρδη με αποτέλεσμα η μετοχή να φτάσει εώς 12 ευρω.
    Το 2007 όταν η μετοχή έφτασε στην κορυφή των 12 ευρω ο Βγενόπουλος πούλησε μετοχές αξίας 210,000,000 ευρώ .
    Συμπτωματικά μόλις τέλειωσαν η πιο πάνω πράξεις , τον Μάιο του 2007, μετά από λίγες μέρες τελείωσε και η θητεία του Χριστοδούλου ο οποίος πήρε και πάλι συμπτωματικά το 1 εκ μετά από μερικές εβδομάδες..

    Συμπτωματικά και πάλι μόλις τελείωσαν η πιο πάνω πράξεις πήραν και οι υπάλληλοι της Λαικης τα 52 εκ μπόνους εκ των οποίων τα μέλη της ανώτατης διευθυνσης π.χ ο εσωτερικος έλεγχος και άλλοι εκτελεστικοί πήραν μπόνους πέραν των 200 χιλιάδες ευρώ ο κάθε ένας !!!

    Οι πιο πάνω λογιστικοί χειρισμοί δεν απέκρυψαν μόνον ζημιές αλλά η μη διαγραφή τους είχε ως αποτέλεσμα ο Ισολογισμός της Λαικής να είναι φουσκωμένος κατά 452 εκ και αυτό σχέση με τα συνολικά ίδια κεφάλαια(3,500 εκ ) της τράπεζες είναι πέραν του 12.5% των ιδιών κεφαλαιων της τράπεζας. Αυτό σημαίνει παραπλάνηση των επενδυτών και των καταθετών και άλλων πιστωτών της τράπεζας. Τους παρουσιαζόταν μια εικόνα πολύ καλύτερη από την πραγματική .
    ΜΑΡΦΙΝ BANK …H εξαπάτηση συνεχίζετε…..

    Όπως ανάφερα πιο πάνω η Μαρφίν Bank η οποία ήταν έμμεσα θυγατρική της Λαικής και η οποία ξανααγοράστηκε από την Λαική για 616 εκ και στην οποία πρόσθεσαν και την ζημιά από την Marfin Financial group ως επένδυση την έδειχναν στα βιβλία ως επένδυση με αξιά 1068 εκ. Αυτή η τράπεζα φούσκα είχε εσωτερική αξία μόνον 268 εκ και στους ενοποιημένους ισολογισμούς αναγνωριζόταν μια υπεραξία (αέρας) 800 εκ ευρω! (1068εκ -268εκ ).

    Η πιο πάνω τράπεζα το 2007 ενοποιήθηκε με την Λαική Ελλαδος και την Τράπεζα Εγνατια και δημιουργήθηκε η Τράπεζα Μαρφιν Εγνατια. Το κόστος και για τις 3 τράπεζες στα βιβλία της Λαικής ήταν γύρω 1.9 εκ ευρώ εκ των οποίων πέραν του 1.2 εκ ευρώ ήταν υπεραξία /αέρας…….
    Μετά από μελέτη της έκθεσης της επιτροπής θεσμών καταλήγουμε στο εξής συμπέρασμα. Η Τράπεζα Μαρφιν Εγνατία, Θυγατρική της Λαικής Τράπεζας στην Ελλάδα είχε δώσει το 2007 τεράστια ποσά για αγορά μετοχών της Μιγ τα οποία εξασφάλιση ήταν μεταξύ άλλων οι ίδιες οι μετοχές της ΜΙΓ. Η εξασφάλιση αυτή μειώθηκε σημαντικά στα επόμενα 2 χρόνια αφού η αξία της μετοχής της Μιγ μειώθηκε σημαντικά. Επιπλέον η Τράπεζα Μαρφιν Εγνατία έδωσε πολλά άλλα δάνεια σε συνδεδεμένες προς την Μιγ εταιρείες τα οποία ήταν σε μεγάλο βαθμό μη εξυπηρετούντα και ακάλυπτα.

    Το σημαντικό συμπέρασμα που βγάζουμε από τα πιο πάνω είναι ότι η Τράπεζα Μαρφιν Εγνατια ήταν ΤΕΧΝΙΚΑ πτωχευμένη το 2009 επιδή είχε ιδία κεφάλαια μόνον 750 εκ ενώ τα ακάλυπτα και μη εξυπηρετούμενα δάνεια ήταν μεγαλύτερου ποσού. (δεν έλαβα ακόμα υπόψη ζημιές από το επενδυτικό χαρτοφυλάκιο της)

    Το πιο πάνω συμπέρασμα μας οδηγεί σε άλλες σοβαρές διαπιστώσεις.
    Η Λαική Τράπεζα είχε ώς κόστος αγοράς της πιο πάνω Τράπεζας μέσα στα βιβλία της γύρω στο 1.9 δις ! Ποσό που ισούται με το 50% των ιδίων κεφαλαίων της! Για το 2008, 2009 αλλά ούτε και το 2010 δεν έκαναν καθόλου διαγραφή μέρος της πιο πάνω επένδυσης όπως προβλέπει το διεθνές λογιστικό προτυπο 36 (IAS36) με αποτέλεσμα ο ισολογισμός της Λαικής Τραπεζας να δείχνει πολύ μεγαλύτερος από ότι θα έπρεπε να δείχνει.

    Το πιο πάνω τι σημαίνει? Σημαίνει ότι όλοι όσοι αγοράσανε ομολόγα, χρεόγραφα η μετοχές της Λαικής Τράπεζας μεταξύ 2009-2011 εξαπατήθηκαν . Τους απέσπασαν χρήματα με ψευδής παραστάσεις. Αυτό είναι δόλος και εξαπάτηση. Στην πιο πάνω εξαπάτηση συνωμότησε μεγάλος αριθμός ατόμων ….

    Σάββας Τταντής Λογιστής/ελεγκτής –Χρηματιστής

  29. avatar
    Savvakis Savvides on September 17, 2014 - (permalink)

    Following further consideration and taking into account some of the comments I had, I have revised the penultimate paragraph of my article as follows:

    “What is really at stake is that this wealth transfer will go outside Cyprus. Even in the case where the Bank takes over the properties or of creating an Asset Management Company in Cyprus, value would be preserved and remain to a large extent within the country. This is the major risk our politicians must be aware of and should be thinking of ways to contain. Perhaps not surprisingly, our politicians are once again barking up the wrong tree. In my opinion, instead of asking for many changes to the new bill which are not even feasible let alone desirable, such as to compel the bank to settle the whole loan when it auctions a mortgaged property, our political leaders should try to understand what is likely to happen and think of ways to guard against or at the very least mitigate its impact on the people of Cyprus. For example, a simple amendment in the new law to be drafted aiming towards regulating the conditions of sale of loan assets outside the Cyprus Banking system (an inferred legal right as the lender-borrower contract does not usually provide for the sale of the loan to third parties or outside the Cyprus jurisdiction) will go a long way towards achieving this objective.”

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