Today, December 16, will see the relisting of Bank of Cyprus (BoC) shares on both the Cyprus Stock Exchange (CSE) and the Athens Stock Exchange (ATHEX). The bank will relist on both bourses after a 21-month absence with 8.9 billion new and old shares opening at €0.24. 

The development comprises a significant development for the banking sector of Cyprus, which has undergone considerable progress during the year, BoC CEO John Patrick Hourican said in a recent appearance on Bloomberg TV.

“Since our investor road show began in July of this year, we have met with approximately 100 of the world’s most sophisticated investors; about 30 of them came to the stock. We brought in people like Wilbur Ross, the EBRD and various others, who are all very pleased with the institutionalization of the stock.”

Investors in the bank’s stock also include depositors, Hourican explained, who have been offered the chance to remove their money from the bank and have not done so. For this reason, depositor behavior indicates that these individuals will remain with the bank for the medium-term.

Discussing the prompt economic recovery the island has demonstrated thus far, Hourican likened the fiscal issues of Cyprus to “an enormous and torturous cardiac arrest.” Though still in recession, he expressed cautious optimism for the coming year, predicting a modest return to growth. 

“The bank,” he said, “is effectively a levered warrant of the economy in that we are 40% of the loan stock, 25% of the deposit base and have 70% of the corporates on the island banking with us. Therefore, Cyprus’ recovery can be played through investing in the Bank of Cyprus.”

“We have about 450,000 of the 800,000 people who live in Cyprus banking with us, as well as an additional 350,000 individuals who have holiday homes here. So we have a balanced business that has domestic as well as international dimensions.”

Capital controls 

Regarding the remaining capital controls, Hourican stressed that the Bank of Cyprus is cooperating closely with the Ministry of Finance to work towards lifting these restrictions. “There is a gateway through which money moves and we would like to see that gateway widened,” he said. “We are absolutely ready for this, having contingent liquidity set up.”

Russian-EU tensions

Touching upon regional tensions following the implementation of sanctions and retaliatory measures between the EU and Russia, the BoC CEO noted that geopolitical and geoeconomic turmoil of this prominence forces businesses and institutions alike to assess the risk this poses to their operations.

This is particularly relevant for the Bank of Cyprus, Hourican explained. “We own a Russian bank, Uniastrum Bank, where we have 2,500 employees working in its 170 Russian branches. The bank has about 1 billion euros of ruble equivalent, and so we have to manage that business despite the challenges the economy faces.”

Equally, he continued, the bank must ensure that its Cyprus operations are nimble enough to remain effective and real for the customers who use it in the light of a changing political environment. 

“We absolutely want to keep that business despite the challenges it is facing; we are very happy with our relationship with Russian customers. They represent a significant portion of our customer base, comprising some 40% of our overseas business.”

“There is no question that the Russian situation puts us on alert to manage our business well – but that’s business,” he concluded.

 

The Council of Ministers has approved two of the five bills relating to the insolvency framework, but they will almost certainly be contested by opposition parties when they are discussed. 

ACCORDING to an official press release, the Council of Ministers approved two bills related to the insolvency framework on Wednesday that is designed to provide a degree of protection against foreclosure for those who have been hit by the recession.

The first bill is designed to regulate insolvency practitioners as provided in the framework that was approved by the Cabinet on 30th July and by the House of Representatives on 6th September.

The second bill revises the Companies Act through the introduction of a restructuring plan that will enable viable companies to stay in business. Both bills are expected to be discussed by the House Finance Committee today when opposition parties will almost certainly attempt to amend the framework, which could result in disrupting the island’s bailout package once again.

The three remaining bills are anticipated to be approved and submitted to Parliament by the end of the month. According to the terms of the Memorandum Of Understanding (MoU) agreed with its troika of international lenders, Cyprus has to pass the new insolvency laws by the end of this year.

However, this appears unlikely unless opposition parties vote in favour.

Energy is the talk of the age for a number of reasons, but this time around we won’t talk geopolitics or regional policy games, but simply keeping warm.   Given the tough economic conditions for households, it can become quite a task and will take good planning to spend less on heating and at the same time keeping the budget afloat. Here’s some of what’s on offer, both in the conventional fuel market but also on the energy-saving environmentally friendly sphere.   Central oil heating   As ever, if you go full conventional on heating you’re dependent on the price fluctuations of demand and supply, taxation, based on the cost of importing the fuel and without taking into account environmental pollution.  More to the point for your budget, there is an increasing cost of purchasing and installing the burners, piping and radiators throughout the house.  The heating is channelled from the radiators through the air and you’ll need to clear the dryness at some point by opening a window, so you’re back to square one! In addition, there is a discrepancy between latest technology installations with over 90% results while the ageing burners (20 years at least) don’t go beyond 80%, so more oil will be necessary to balance out the two and get adequate heating. Don’t underestimate the valuable space lost to the installations.   Air conditioning   The easy way out, relatively cheap, with possibilities of low electricity cost (only in the case of inverters mind you). There are many drawbacks however to directly heating the air, such as quick loss of what you gained (heat), dryness and eliminating a useful degree of humidity, without sparing the walls. Air conditioning also requires frequent maintenance, if used both summer and winter and that’s more money out of the budget.  What we have to remember is that air conditioning is not the answer to effectively heating your house, but merely a facilitator, a temp so to speak as the basic use of these devices is a cooling one. Costs vary depending on make, size (BTU) and quality. Our suggestion is inverter type devices that monitor house temperature and adapt their function automatically.  Significantly, quality of heating leaves a lot to be required in comparison to units.   Stoves   Financially fitting to wage loss, this type of heating technology is quite environmentally friendly. Most popular in this category are wood stoves and pellet burners. In order to install a pellet stove you need to take into account that a funnel is required to remove fumes. In spite of these additions, the stove is four to five times more heating effective than the wood solution. Many pellet stoves also have an automated provision system and essentially switch off themselves when they run out.  An alternative is installing a stove connected to the home’s heating system. It won't take up space in your house, as it can be installed in the storage room, replacing the oil burner by heating up the water being channelled to the units.   Energy fireplace   Much more reliable than its traditional equivalent, as it makes full use of hot air being created by burning wood in the chamber surrounding it, significantly requires less wood, less frequently, with the air supply either being natural  (the ‘plain’ energy fireplace) or mechanically induced (a fireplace heater). Doors need to be shut at all times to maintain a steady current of warmth and secure value for money when it comes to burning wood. It can be connected to the heating system, thus also having a smooth warm effect on the walls.  The effect remains long after it’s switched off unlike the conventional fireplace. You can get a 75% heating performance with four to six kilograms of firewood an hour - that’s 40 to 50 kilos a day or approximately 7 tonnes for the winter season, on the premise that it burns for around 8 hours daily.   Electric heaters   An effective solution for smaller homes with a low purchase cost if you don’t have central heating. Watch out for mini-draughts around the house when using electric heaters, which might mean door undercurrents, tiny window spaces which can make a difference or small structural cracks here and there. Make sure you seal them.   Infrared    heating units Think of it as a ‘hot’ work of art hanging from the ceiling, taking up a piece of ‘vertical’ space in your home. Infrared rays don’t heat up the air as the rest of the systems on offer but they exude the heat so to speak. This is definitely economical, easy to install but also user-friendly, as it doesn’t involve getting your hands dirty with petrol, oil, piping, radiators and what not. The cost goes up depending on the kilowatts you need to keep warm. Generally it might take up to €400 per panel.    Fan coils   Both a cooling and a heating electrical system, with a relatively low installation price (around 300 per unit). When connected to a heating pump (€4,000), it can reduce the cost by up to a third of what you’ll need with central heating.  The main drawback is heating and drying the air up, causing possible health issues from either dust, dry air particles and so on.  Its accident hazards are low, though it does require frequent maintenance. If you’re into aesthetics you might want to pass up, as it needs a huge amount of space.   Ceramic sun   Ceramic technology infrared units are now all the rage, being at the peak of heating technology sales internationally.  They use up 50% less than conventional oil burners, with a low purchase cost and the slightest traces of environmental pollution.  Importantly, there’s no bright heating light, very little space taken up (50x10 cms) and no maintenance needed. They come with a five-year warranty.   Sub-floor heating   Aesthetically perfect for those of us who believe heating systems take up too much space or that their unpleasing effect must be hidden away, without panels or radiators in sight.  Other, slightly more significant advantages are the fact that the system works in exactly the same way as conventional types and can take any fuel (oil, natural gas, solar, geothermal, to name a few).  The difference is that hot water does not flow into units but the sub-floor itself, acting as a heating beacon.  A piping system carries the hot water to the floor surface and the heat is carried over throughout the house.  In this manner, heat distribution is more balanced - in other words you don’t have to virtually sit over the unit to warm yourself!   Any  floor can survive with this kind of system - tiles, marble, wood, plastic or cement.  You have to decide on the type of floor beforehand so the study on the sub-floor heating can take into account the physics involved (conductors of heat principle).  It’s also good to know where the carpets will be, as they draw a lot of heat, so it will take more pipes to heat up the floor.  The cost is higher than the conventional system (sometimes by quite a margin), but it will quickly prove value for money as the cost of operating it is considerably lower than the radiators.      

Organised at the request of Attorney General Costas Clerides, a meeting at Nicosia’s Conference Centre on Thursday will examine the progress of ongoing inquiries into the cause of the destruction of Cyprus’ economy.

According to Phileleftheros, the meeting has been called on the occasion of the completion of the first connected case as well as issues that have arisen in those involving Laiki Bank. Accompanying Clerides are assistant Attorney General Rikkos Erotokritou and a team of lawyers, all of whom will be briefed on how the investigations are going.

The file on the first case will also be handed to the Law Office of the Republic on Thursday or Friday for further instruction to be issued.

According to Phileleftheros, the police will suggest criminal charges are filed against 10 people, former officials and advisors of the Bank of Cyprus, in connection to information they provided on the condition of the bank.

Also, investigations into a similar case involving the Laiki Bank are at an advanced stage with some related issues expected to be ironed out during the meeting. 

Cyprus and the US on Tuesday signed in Nicosia a Foreign Account Tax Compliance Act agreement aiming to ensure full reporting of foreign financial assets held by American taxpayers.

This will greatly enhance the profile of Cyprus as a transparent international business centre.

The agreement was signed between Finance Minister Harris Georgiades and US ambassador John M. Koenig. 

The Civil Registry and Migration Department on Friday announced new procedures for third party nationals’ acquisition, renewal or reacquisition of a long term resident permit. According to an official announcement, the changes affect those who reside or who will enter the Republic for family reunification purposes, and who are holders of an international protection status. They are coming into force from Monday, December 15.

The changes see the permit being issued as a card which will contain biometric information on the holder including their fingerprints and photo as well as their signature. The Department also warned that even those with applications still pending, will need to reapply.

“A third country national that has submitted an application for obtaining or renewing a residence permit, the examination of which is pending on December 15, 2014, must, before February 13, 2015, submit the above mentioned Additional Application and must pay the additional €10,00 fee.

Otherwise, the pending application will be rejected,” the announcement said. Permits that have already been issued by December 15 will remain in force until they expire, the department said.

Visit www.moi.gov.cy/crmd for more information on the application procedures and fees in English as well as Greek. 

Ministers of Cyprus, Greece and Egypt met in Nicosia on Tuesday to push forward their energy cooperation drive.  

Cyprus Energy Minister Yiorgos Lakkotrypis, Petroleum and Mineral Resources Minister of Egypt Sherif Ismail, and Greek Energy Minister Yiannis Maniatis had a substantial and results-oriented discussion on the prospects of closer cooperation in the energy sector.  

The Nicosia meeting was the first follow-up since the landmark Cairo Summit of November 8. The trio reiterated their countries’ common desire to build on the momentum of tripartite cooperation between their respective Governments.  

They agreed to establish a framework for tripartite consultations, in order to facilitate dialogue and advance trilateral co-operation between them in the field of hydrocarbons for the benefit of their countries and of the wider region.  

They expressed their readiness to examine ways and means for the optimal development of hydrocarbons.   The Ministers said the discovery of important hydrocarbons reserves in the Eastern Mediterranean could and must serve as a catalyst for a broader cooperation on a regional level, contributing thus to the peace and stability in the region.  

Specific areas where cooperation was needed were: environmental standards in offshore hydrocarbons operations, methods of safety, energy infrastructure, research and development, institutional expertise and capacity building.

Former Deutsche Bank chief Josef Ackermann has been named the new chairman of bailed-out Cyprus' biggest bank. The shareholders' and board votes on Thursday come after the Bank of Cyprus passed a European in-depth review of its finances last month. The bank had earlier bolstered its capital base by raising 1 billion euros ($1.25 billion). U.S. billionaire Wilbur Ross, who led a group of investors in pouring tens of millions into the bank, was elected vice chairman. Russian Vladimir Strzhalkovskiy stays on also as vice chairman. Bank of Cyprus still faces major hurdles — half of all its loans are bad. Police thwarted several dozen angry bondholders who lost money in Cyprus' multibillion euro international rescue deal last year from forcing their way into the bank's headquarters.

Moodys Investors Service has upgraded Bank of Cyprus’ (BoC) long-term deposit ratings to Caa3 from Ca with stable outlook and the provisional senior unsecured programme rating to (P)Caa3 from (P)Ca, “to reflect the bank’s strengthened capital buffers as well as the reduction, to some extent, of its reliance on central bank funding”. Moody’s also said it has adjusted upwards its standalone baseline credit assessment (BCA) to caa3 from ca.

“Despite the upgrade, the bank’s ratings continue to be positioned at the lower end of Moody’s rating scale, reflecting the immense challenges the bank still faces, mainly in terms of addressing very high volumes of non-performing loans” it said. It noted that “the upgrade primarily reflects the improvement in the bank’s capital buffers, which enhance its capacity to absorb credit related losses”.

“Upward pressure could develop on the ratings following further improvements in BoC’s financial performance, such as a reduction in NPLs and a material decrease in central bank funding, combined with the elimination of existing capital controls” said Moody’s.

On the other hand, downward pressure on BoC’s ratings would develop following deterioration in the bank’s asset-quality metrics beyond Moody’s current expectations, which would significantly erode capital buffers bringing them close to the regulatory minimum; and/or increased reliance on Euro-system funding, the rating agency explained. The Bank of Cyprus will hold its Annual General Meeting on Thursday to elect a new board of directors, following a recent €1.0 billion capital raise, the biggest foreign direct investment in the island’s history.

Cyprus’ largest lender, has been recapitalised with depositor money, as part of the €10 billion bailout Cyprus received from the EU/IMF, under which 47.5% of deposits over €100,000 have been converted to shares. 

Property sales displayed a new increase in September albeit in the shadow of concerns of the repossessions bill. The number of submitted sales documents reached 373 in September, a 31% increase on the 285 submitted in September 2013. The increase was also higher than the 26% rise recorded comparing August 2013 and 2014.

However, Vice Chairman at Real Estate Agents Association Solomon Kourouklides has cautioned the figures are not representative of true market conditions. In comments to Stockwatch, Kourouklides said: “People expected the law on repossessions to be voted in and many rushed to make some sales to service their loans. These sales are not ordinary sales; they are made out of necessity by land developers and private individuals.”

This also led to a different kind of property purchasing, Kourkoulides said, noting some people were attempting to take advantage of low prices. He said how the property market would be affected by the repossessions law depended on how the banks would be enforcing it as well as what other legislation the House would vote in, including the solvency law in particular.

Between the start of the year and September, there have been 3,328 property sales, a 24% increase on the 2,684 sales made over the same period in 2013. Increases were recorded in all towns with Limassol enjoying the greatest rise—51%--with 1,057 compared to 702.

Next is the free Famagusta district where property sales rose 37% from 172 to 235. A 24% increase was recorded in Larnaca with 557 until September this year compared to 449 by the end of the same month last year.

In Nicosia, the increase was 24% rising from 501 to 583 while Paphos had the lowest increase but a significant volume of properties with a 4% rise from 860 to 896.