The two main Cypriot lenders, Bank of Cyprus and Hellenic Bank, are set to sell packages of non-performing loans amounting to 4 billion euros (4.44 billion U.S. dollars), Central Bank governor Constantinos Herodotou said on Monday.
Herodotou told the parliamentary finance committee that the selling of the loans will be a major development for Cypriot banking.
“The amounts are such that will allow the banks to turn their attention to operational issues instead of only dealing with non-performing loans, something which supervising authorities are pressing them to do,” Herodotou added.
He said Bank of Cyprus, the largest lender of the eastern Mediterranean island nation, is negotiating the sale of non-performing loans amounting to 2.8 billion euros.
Hellenic Bank, the second largest in Cyprus but the biggest in retail banking, with the majority of its clients being small depositors, will sell 1.2 billion euros worth of red loans.
Herodotou said the sale by Bank of Cyprus will be effected at the end of February, but he added he did not have an exact date for the sale by Hellenic Bank.
The two banks hold the majority of non-performing loans, which amounted to 9.667 billion euros at the end of August, 2019, according to the latest data released by the Central Bank.
The sale will bring non-performing loans down to 5.667 billion euros, a relatively small amount compared to 27.328 billion euros, or 52 percent of the total loan portfolio at the height of the 2013 financial and banking crisis. (1 euros = 1.11 U.S. dollars)