THE Nicosia district court will next week continue hearing the case brought before it, where the Central Bank of Cyprus (CBC) is seeking to appoint a liquidator for the Cyprus branch of the Federal Bank of the Middle East (FBME).

The owners of FBME Cyprus have challenged the CBC’s petition, arguing that the banking regulator’s move is illegal.

Earlier this month, the district court allowed FBME to prepare its objections to the liquidation request. The court’s decision was seen as a setback for the CBC, which had hoped to initiate the bank’s liquidation without contest.

Countering, the CBC has meanwhile petitioned the Supreme Court for a writ of certiorari – an order by which a higher court reviews a case tried in a lower court – effectively seeking to have the district court’s decision annulled, thus preventing FBME from challenging the liquidation process.

On a separate track, a hearing is pending before Supreme Court which the CBC has petitioned for revoking the bank’s license.

The Central Bank needs court approval to revoke a lender’s license.

The CBC filed the revocation petition on December 21, but FBME likewise challenged it.

The CBC took over the operations of FBME in 2014 after the latter was named a “financial institution of primary money-laundering concern” by the US Department of the Treasury (FinCEN).

The term of Andrew Andronicou, the second administrator appointed by the CBC for FBME, expired in late December.

It was not clear whether the CBC has appointed a replacement for Andronicou. The CBC declined comment.

On behalf of the shareholders of FBME, Nigel Perry told the Cyprus Mail it was his understanding that since December 31 bank customers have been unable to access their funds, which have long since been moved to Bank of Cyprus.

“Without an administrator for FBME, there is no one to sign off on the cheques,” he said.

FBME customers have a €1,000 per week withdrawal limit.

Technically, the bank itself is still open and its staff continue to be on the payroll, Perry said.

FBME deposits are currently controlled by the Central Bank, with some €270m placed in escrow with the Bank of Cyprus, widely rumoured in the past as the potential buyer of the Tanzania-based bank’s local branch.

In mid-December, former Attorney-general Alecos Markides penned an open letter to the President, warning that Cyprus could pay a “huge sum” in compensation to FBME as the Central Bank has failed to act as an independent institution.

Markides, on behalf of FBME bank owners Ayoub-Farid Michel Saab and Fadi Michel Saab, said the Republic was at risk over “mishandling” the FBME case.

Last September, an Arbitral Tribunal of the International Chamber of Commerce (ICC) in Paris decided it had jurisdiction over the claims by the owners of FBME against the Republic of Cyprus regarding the Lebanese-Cyprus Treaty governing the protection of investor rights.

And in November, FBME clocked another success in the United States, where a judge ordered FinCEN to carry out and complete a new administrative process within four months.

This week, main opposition AKEL renewed calls for the matter of the bank to be tabled for discussion at the House ethics committee.

Last year, the ethics committee was twice scheduled to discuss the issue, but refrained from doing so after being advised by the Attorney-general, who said it would be against the public interest and would cause problems to ongoing legal procedures.

But given the latest developments with FBME and the potential for compensation, said AKEL MP Aristos Damianou, it was now all the more urgent to revisit the matter.

“Now is the time to take a look at this issue, because as we consider ways of generating savings for the state, it cannot be that through our own actions we burden state coffers,” Damianou said.

Back in April last year, ruling DISY MP Andreas Kyprianou alleged that AKEL were rooting for FBME because the communist party had had a cosy relationship with the bank owners during the administration of Demetris Christofias.

AKEL hit back, arguing that any money lent by the bank was to the Cypriot state, not the government of the day.

In the past, FBME has commented that since 2008 it has invested €134m in the Cyprus economy, while in 2012 it rushed to the government’s aid when Cyprus needed to sell €240m in sovereign debt, while in 2014 the finance ministry said an agreement had been reached in principle for a further investment of $300m.

By Elias Hazou

The government generated a fiscal deficit on a cash basis of €174.1m in January to November, roughly 1 per cent of the economy, compared to a €225.4m surplus a year before mainly on decreased revenue, the finance ministry said.

Overall revenue fell an annual 3.5 per cent to over €5.6bn in January to November, mainly on decreased non-tax revenue, the ministry said in statement on its website on Thursday. Direct tax revenue fell 5.2 per cent to €1.7bn while indirect tax revenue rose 1.4 per cent to €2.2bn. Social security contributions rose 3.7 per cent to €891.7m, while non-tax revenue fell 15 per cent to €716.6m.

Overall expenditure rose 2.8 per cent to €5.3bn in the first eleven months of the year compared to the respective period of 2014, the finance ministry said. The rise in spending was on increased current transfers which rose 13 per cent to well below €1.4bn, offsetting a 1.7 per cent saving in public wages, which fell to €1.4bn and a 3.5 per cent drop in social security outlays. Spending on pensions rose 1.2 per cent to €514.9m while that on goods and services rose 0.9 per cent to €338.7m.

The primary balance until November, which excludes interest payments, was a €326.1m surplus, which is less than half of the primary surplus of €675.2m the government generated a year before, the ministry said. Interest payments in the first eleven months the year rose an annual 11 per cent to €500,1m. Public debt at the end of November stood at almost €19.4bn which is 4.8 per cent higher compared to the respective period of 2014.

By Stelios Orphanides

The unification of the mobile network in Cyprus has encountered significant legal obstacles, leading to a delay in the implementation of the confidence-building measure between the island’s two communities.

According to local news sources, the Republic of Cyprus legally forbids cooperation with non-regulated entities, such as mobile operators in the Turkish-occupied areas of the island. 

Companies operating in the Government-controlled areas of Cyprus are regulated by the Office of the Commissioner for Electronic Communications.

“This is not a matter of the Technical Committee anymore," a Committee source has reportedly stated, noting that this obstacle requires a governmental solution. The Technical Committee is not expected to discuss the issue further under the given circumstances. The matter will thus be put before President Nicos Anastasiades and Turkish Cypriot leader Mustafa Akinci for further consideration.

The integration of the island’s telephony network was first announced in June of this year by the two Chambers of Commerce and Industry, along with plans to integrate the electricity grids of the communities. These were among the confidence building measures the two leaders agreed on last May, following the resumption of settlement talks.

Cyprus has been divided since 1974 when Turkey invaded and occupied its northern third. UN-led talks, aiming to reunite the island under a federal roof, resumed last May.

NICOSIA will have a complete facelift by 2020 as regards mobility infrastructure, state officials and the town’s mayor Constantinos Yiorkadjis said on Friday.

The Nicosia Integrated Mobility Master Plan (IMMP) was discussed during a meeting between Yiorkadjis, and the transport and finance ministers Marios Demetriades and Harris Georgiades.

Projects, which include the construction of bus and bicycle lanes, the pedestrianisation of roads, and the introduction of minibuses for the old town, are expected to be completed by 2020.

“When all of these projects are completed, we will be talking about a completely different Nicosia,” Demetriades said.

He said that at the meeting they were also presented with the project for the tram, but that no decision has been taken yet as “we are very far form taking any decisions whether to go ahead or not”.

As regards the upgrading of public transport infrastructure, Demetriades said that his ministry works constantly to deliver the announced projects.

The contract to introduce the telematics system on buses was awarded, he said, but that at the moment his ministry is in anticipation of the tenders review authority. Regarding the plans for the facelift of bus stops, he said that some have already been done, while an infrastructure upgrade programme is being implemented.

“We believe in public transport and it is up to us to make it attractive for the public,” he said.

The projects included in the mobility master plan have already been approved, Yiorkadjis said, and it has already begun to take shape.

He said that the one-way system is to be introduced on Makarios and Kallipoleos avenues, and that bus and bicycle lanes are to be built, as well as additional pavements both in main streets and city neighbourhoods.

The municipality has already received 13 minibuses for transportation within the old town, and soon, a tender competition will be announced for a contractor to run them, he said.

Yiorkadjis said that the Engomi municipality has also announced the competition for the construction of bicycle lanes that will connect the capital’s four universities with the city centre.

The IMMP is a prerequisite for the revitalisation of the urban centre, Yiorkadjis said, while public transport should also become more reliable.

The aim, he said, is for all the projects to have been completed by 2020.

By Evie Andreou

Cyprus is back in the Top 10 for real estate enquiries worldwide it was announced by the property website Cyprus Property News.

Cyprus leaped four places to number ten in the November 2015 edition of the ‘Top of the Props’ published by the property portal TheMoveChannel.com, accounting for 2.29% of on-line searches on the property portal.

This is only the second time Cyprus has been in the Top 10 since December 2013 and real estate enquiries have returned to levels last seen in 2013.

Throughout 2014, the island lingered outside TheMoveChannel.com’s Top 10, suggesting the promise of overseas interest in its low-priced real estate, but Cyprus fell even further amid the uncertainty surrounding Greece’s economy: in May 2015, the country tumbled to a record low of 26th in the Top of the Props chart, with just 0.27 per cent of enquiries made on TheMoveChannel.com.

It is thought that Cyprus has made a surprising return to the Top 10 thanks to the islands low priced properties attracting foreign buyers.

CREDIT rating service DBRS has upgraded its long-term rating for Cyprus from B (low) to B, it announced on Friday.

A press release issued on Friday said the upgrade reflects DBRS’ view that strong fiscal performance and signs of economic stabilization have helped ease near-term concerns regarding the fallout from the financial crisis.
“Cypriot authorities have demonstrated a strong commitment to the troika-supported adjustment program, and available official financing exceeds Cyprus’ needs,” the rating agency said.

“Nonetheless, Cyprus’ B rating underscores the depth of Cyprus’ challenges and continued need for external support. Cyprus remains vulnerable due to high levels of debt, relatively high real interest rates and reliance on external demand to fuel growth.”
According to the press release, improvements in fiscal management, debt, and liquidity, are the main factors driving the upgrade.
“Sustained economic and fiscal outperformance could lead to further upward pressure on the ratings,” DBRS added.

“Accelerating progress on the resolution of non-performing loans, on privatization and on steps to encourage foreign investment could enhance growth prospects and also provide support to the ratings.”
On the other hand, it warned, “a prolonged period of weak growth, particularly if combined with fiscal policy slippages and higher financing needs, could result in downward pressure on the ratings”.

“External factors, including political developments between Cyprus and Turkey and between the EU and Russia, could also have an impact on prospects for growth and investment in tourism, financial services and the energy sector,” it added.

Bank of Cyprus’s board of directors decided to extend chief executive officer John Patrick Hourican’s contract for two more years.

The lender was commenting in a statement on the website of the Cyprus Stock Exchange website on Tuesday.

The new contract of the bank’s CEO who submitted his resignation in April citing personal reasons and took over his position in late 2013, will enter into force on February 2016.

The board thanked Hourican for his services and his contribution to the bank, Bank of Cyprus said.

The bank’s chairman, former Deutsche Bank strongman Josef Ackermann, said that he and the bank’s board of directors were “very pleased” over the Irish banker’s decision to continue his “excellent work” by signing a new contract.

“I would like to express our thanks to Rioghnach Hourican who is sitting in the front seats for her support for John’s decision,” Ackermann said at the bank’s annual general meeting right before offering her a bucket of flowers.

“As you know, the board’s nominations committee has launched a search for a new CEO since last April and we have actually made substantial progress in this regard by identifying a short list of well qualified candidates,” Ackermann said. “At the same time, however, we have been working on John to encourage him to reconsider his earlier decision to step down and to remain instead on board. We are delighted at the end that John and his family have agreed to do so”.

By Stelios Orphanides

Subject to four prior actions, the eighth review of the Cyprus economic adjustment programme has been successfully completed by the troika of the island’s international lenders (IMF, EC, ECB)

FINANCE Minister Harris Georgiades announced on Friday that Cyprus has completed the eighth review of its economic adjustment programme, but warned that reforms must continue to improve the island’s economic performance.

Mr Georgiades anticipates that the eighth review will be the last and will be completed formally in mid-January after a Eurogroup meeting, which will be followed by the disbursement of a further tranche of the bailout loan.

It seems that a delegation from the troika of the island’s international lenders may not have sufficient time to carry out a further review before Cyprus exits the economic adjustment programme on 31st March 2016.Prior actions The troika has set four conditions (prior actions) for releasing the next bailout tranche:

*Parliament has to adopt the bill relating to the creation of a new state-owned telecommunications company.

*Cabinet approving the bill regulating CYTA employees labour issues.

*Cabinet deciding the manner and format of the unbundling of the Electricity Authority of Cyprus (EAC), on the principles set out in the third EU energy package.

*Confirmation by the troika of the loan sale bill that was adopted by parliament on 12th November 12 is to their satisfaction.

The cooperative banking movement on Thursday announced it requires some €100 million in taxpayers support to remain viable.

The announcement comes just two years after the state’s €1.5 billion cash injection and significant changes to the cooperative movement’s leadership.

A Cooperative Central Bank announcement said the funds were required to cover accumulated damage caused by non-performing loans (NPLs).

The announcement said its main shareholder, the state “intends to strengthen the capital base of the cooperative banking movement,” but did not state how much money would be involved.

A capital plan would be submitted to this end, the announcement said.

The coop banking movement announced losses of €228 million for the first nine months of 2015, compared to profits of €109.5 million over the same period in 2014 .

Σε αναμμένα κάρβουνα κάθεται η κυβέρνηση ενόψει της σημερινής συνεδρίασης της βουλής, όπου θα τεθεί προς ψήφιση το επίμαχο νομοσχέδιο για την πώληση δανείων σε τρίτους. 

Το νομοσχέδιο αυτό αποτελεί προαπαιτούμενο για τους πιστωτές στο πλαίσιο της όγδοης αξιολόγησης του προγράμματος προσαρμογής και οι διεθνείς πιστωτές ήταν ξεκάθαροι επί του θέματος στις επαφές τους με τις ηγεσίες των κοινοβουλευτικών κομμάτων. 

Οι επικεφαλής των κλιμακίων των διεθνών πιστωτών τόνισαν με έμφαση προς τις ηγεσίες του ΔΗΣΥ και του ΔΗΚΟ με τις οποίες χθες είχαν διαδοχικές συναντήσεις, ότι θέλουν να είναι καθαρό το νομοσχέδιο για την πώληση δανείων. 

Τη θέση αυτή έθεσαν έντονα και προς την κυβέρνηση κατά τις επαφές τους με τον υπουργό οικονομικών. 

Οι κυπριακές αρχές γνωρίζουν εκ προοιμίου ότι αν ψηφιστεί με ανατρεπτικές τροπολογίες το επίμαχο νομοσχέδιο η αξιολόγηση δεν θα ολοκληρωθεί με επιτυχία. 

Όπως δήλωσαν στη StockWatch ανώτατα στελέχη των δύο κομμάτων που συμμετείχαν στις συναντήσεις με την τρόικα, οι πιστωτές υπέδειξαν ότι δεν θα αποδεχθούν στρεβλώσεις από τυχόν τροπολογίες που θα καταθέσουν τα κόμματα. 

Επεσήμαναν ταυτόχρονα τις επιπτώσεις για τις τράπεζες αν δεν αποτελέσει το εν λόγω νομοθέτημα μέρος της εργαλειοθήκης τους για αντιμετώπιση των μη εξυπηρετούμενων δανείων. 

Τα μη εξυπηρετούμενα δάνεια ανέρχονται στα €27 δισ. 

Σωρεία τροπολογιών 

Τα κόμματα της αντιπολίτευσης δεν φαίνεται να πτοούνται από τις προειδοποιήσεις των πιστωτών και της κυβέρνησης και αναμένεται στη σημερινή ολομέλεια να καταθέσουν 18 τροπολογίες. 

Στο επίκεντρο των τροπολογιών βρίσκεται αυτή του ΔΗΚΟ και εκτιμάται ότι ενδέχεται να κρίνει την ψήφιση του νομοσχέδιου. 

Η τροπολογία δίνει το δικαίωμα αγοράς του δανείου από τον επηρεαζόμενο δανειολήπτη ή εγγυητή. 

Ωστόσο οι διεθνείς πιστωτές είναι κάθετοι ενάντια στην εν λόγω τροπολογία, γιατί ελλοχεύει, όπως ανέφεραν, ο ηθικός κίνδυνος οι καλοί δανειολήπτες να παύσουν να καταβάλλουν τη δόση τους. 

O πρόεδρος του ΔΗΚΟ εξήγησε χθες στους δανειστές τους λόγους που επιβάλλουν την υιοθέτηση της εισήγησης αυτής και τις θετικές επιπτώσεις που θα έχει τυχόν έγκριση αυτής της πρότασης ευρύτερα στην οικονομία. 

Ενδεικτική, πάντως, της σημασίας που δίνουν οι επικεφαλής των πιστωτών στην πώληση δανείων, είναι ότι στις επαφές τους με το ΔΗΣΥ και το ΔΗΚΟ συνοδεύονταν από με μέλη του τεχνοκρατικού κλιμακίου. 

Τόσο η συνάντηση τους με τον ΔΗΣΥ, όσο και με το ΔΗΚΟ, ξεπέρασε το προκαθορισμένο χρονικό πλαίσιο που ήταν προγραμματισμένο καθώς οι πιστωτές υπέβαλαν σωρεία ερωτημάτων και διευκρινήσεων. 

Ο πρόεδρος του ΔΗΣΥ Αβέρωφ Νεοφύτου τόνισε χθες μετά το πέρας της συνάντησης με τους πιστωτές, ότι ο ίδιος και το κόμμα του «τρέμουν με την ιδέα να επαναληφθεί το σενάριο που έγινε τον Σεπτέμβρη του 2014 με την Ελλάδα».