37326
Cyprus CB Chief Optimistic  of Growth, Banking System
World Economy

Cyprus CB Chief Optimistic of Growth, Banking System

Cyprus Central Bank and European Central Bank Board member Chrystalla Georghadji said on Sunday that she is optimistic about the course of both the Cypriot economy and the banking system.
Her comments came as the island edges closer to its exit from its three-year economic adjustment program, which expires in March, Cyprus News Agency reported.
In an interview with CNA, Georghadji said the first signs of a reduction in the high stock of non-performing loans have started to appear and added that the improvement of the macroeconomic environment, which in turn will contribute to a reduction in the non-performing loans, constitutes an essential prerequisite.
After the financial meltdown of 2013, the Cypriot government concluded in March 2013 with the EU and the IMF a €10 billion bailout to avert the collapse of its oversized banking sector.
 The program featured a bail-in of deposits over €100,000 to recapitalize the island’s largest lender and the second largest bank went into resolution. The haircut was accompanied with capital controls that hampered economic activity.
Georghadji stated that the economy consistently out-performed the projections of Cyprus’ lenders, registering growth of 1.6% of the GDP in 2015, to be followed by growth which may exceed 2% in the current year.
 “The recent economic developments were better than those anticipated by our international lenders, particularly concerning the growth rate of 1.6% in the previous year and an expected growth rate above 2% in 2016,” she told CNA.
Georghadji outlined that the growth rate increase will have a positive impact both on the labor market as well as on the reduction of NPLs, which in turn will benefit economic activity, as borrowers are relieved and consumption is strengthened thus improving the banks’ balance sheet with bigger incentives to provide new credit and finance into the economy.
On the banking sector, Georghadji added that following the events of 2013, the island’s major banking institutions have passed the 2014 EU wide stress test and enjoy today “a strong capital” base.
The central bank chief added that banks have increased the coverage ratio without having to raise capital, whereas the cooperative sector received additional state aid of €175 million, after the capital injection of €1.5 billion in 2014 from bailout funds.
 “The level of NPLs remains the biggest problem facing the banks,” Georghadji pointed out, adding that apart from the creation of internal restructuring units in the banks, the improvement of the macroeconomic environment, which remains as an essential prerequisite, is expected to gradually ease the problem.
She noted, however, that despite the fact the NPL ratio remains at high levels, “signs for the improvement of the situation through restructuring has begun to emerge.”
Georghadji pointed out that loan restructuring reached €4.7 billion by November 2015, outlining that restructuring started to pick up pace as both lenders and borrowers familiarize themselves with the relevant procedures and the new insolvency framework.

Short URL : https://goo.gl/efNFhp
  1. https://goo.gl/VSnaTz
  • https://goo.gl/DjYaEb
  • https://goo.gl/lcKvaz
  • https://goo.gl/TrDFmf
  • https://goo.gl/wPcESX

You can also read ...

OECD: Youth Likely to Face Higher Inequality in Old Age
Younger generations have been experiencing more unstable labor...
Singapore Exports See Surprise Drop
Exports from Singapore last month stumbled after four months...
Outlook for Global Economy, Equity Markets Brighter
Ebrahim Rahbari remains positive on the global economy and...
UN Expert Says: IMF, WB Looking More Like Failed Institutions
The lending policies of the International Monetary Fund are...
Brazil August Growth Lowest in Five months
Economic activity in Brazil contracted in August at the...
Low ECB Rates an Opportunity to Reform
Easy monetary policy gives eurozone governments a window of...
S. Korea Money Supply Up 9.1%
The money supply in South Korea jumped 9.1% in August from a...
US Economic Confidence Dips
The confidence of Americans in the US economy tumbled into...

Trending

Googleplus