Παράταση μέχρι τις 31 Μαρτίου του 2016 να υποβάλουν τις ετήσιες οικονομικές τους εκθέσεις, δίνει ο Έφορος Εταιρειών σε περίπου 40.000 εταιρείες, ενώ θα διαγραφούν άλλες περίπου 54.000 εταιρείες από το Μητρώο του Τμήματος.

Όπως δήλωσε στον «Φ» ο Έφορος Εταιρειών, Σπύρος Κόκκινος, το Τμήμα του θα δώσει παράταση σε όλες τις εταιρείες για τις οποίες υποβλήθηκαν ενστάσεις διαγραφής, είτε από τις ίδιες, είτε από τους πιστωτές τους.

«Σε περίπτωση που δεν συμμορφωθούν μέχρι τις 31 Μαρτίου του 2016, υποβάλλοντας τις ετήσιες εκθέσεις και τις οικονομικές καταστάσεις τους, τότε θα προχωρήσουμε στη διαγραφή τους», δήλωσε ο κ. Κόκκινος, αναφέροντας ότι από τις περίπου 94.000 εταιρείες που βρίσκονταν σε διαδικασία διαγραφής, υποβλήθηκαν ενστάσεις για περίπου 40.000 εταιρείες.  

Ως γνωστό, σήμερα λήγει η τρίμηνη παράταση που τους δόθηκε για να συμμορφωθούν, διαφορετικά θα διαγραφούν. Κληθείς να σχολιάσει στο τι θα γίνει με τις υπόλοιπες περίπου 54.000 εταιρείες για τις οποίες δεν υποβλήθηκαν ενστάσεις, δήλωσε ότι αυτές θα διαγραφούν από το Μητρώο του Εφόρου Εταιρειών και η διαγραφή τους θα δημοσιοποιηθεί στην Επίσημη Εφημερίδα της Δημοκρατίας.  
Όσον αφορά στο θέμα της παράτασης που θα δοθεί στις εταιρείες το Τμήμα του Εφόρου Εταιρειών θα αποστείλει σχετική ενημέρωση σε όλους τους εμπλεκόμενους φορείς για να ενημερώσουν τα μέλη τους.   
Στο μεταξύ, σε δηλώσεις του στον «Φ» ο πρόεδρος του Δικηγορικού Συλλόγου, Δώρος Ιωαννίδης, δήλωσε ότι μια εταιρεία που διαγράφεται από το Μητρώο του Εφόρου Εταιρειών, μπορεί να επανεγγραφεί μόνο μετά από απόφαση δικαστηρίου και ότι η όλη διαδικασία παίρνει μερικούς μήνες. 
Ο κ. Ιωαννίδης, εξέφρασε την άποψη ότι για όσες υπήρχαν οικονομικές εκκρεμότητες έχουν υποβληθεί ήδη ενστάσεις διαγραφής τους ενώπιον του Εφόρου και ότι οι υπόλοιπες απλά είναι ανενεργές γι’ αυτό και θα πρέπει να διαγραφούν από το Μητρώο του Εφόρου Εταιρειών.  
Όπως αποκάλυψε τον Σεπτέμβριο ο «Φ», με αποτέλεσμα το όλο θέμα να εγγραφεί και ενώπιον της Κοινοβουλευτικής Επιτροπής Εμπορίου, ο Έφορος Εταιρειών, προχώρησε στη διαδικασία της διαγραφής

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A Troika delegation (IMF, EC, ECB) returns to Cyprus on November 8 for the eighth evaluation of the island`s adjustment programme which ends on March 31, 2016.

The Cyprus News Agency said the international lenders would remain on the island until November 13 and would focus on non-performing loans (NPL) as well as the strengthening of the supervisory framework for the restructuring of loans. Emphasis would also be given on the issue of the sale of loans, the implementation of structural reforms and privatisations, it said.

The troika’s return comes after the upgrading of the island`s economy by Fitch as well as the third bond issuance for the country since its international bailout in 2013. Cyprus raised €1 billion from the 10-year eurobond (EMTN) issued last Wednesday at a yield of 4.25 per cent.

IMF Spokesperson Jerry Rice said last week that as the economy was recovering and recession receding as was the ability of borrowers to service their debts.
He added that however that NPLs were a “serious problem”, and unemployment would need time and effort to overcome. But he also said the first signs of declining NPLs were already showing.

IMF Representative to the island Vincenzo Guzzo, also deemed the reduction of high NPLs a high priority, adding that that attention should not only focus on the banks` capital but also on the broader economy.

CNA said that during the eighth evaluation, the lenders would also focus on the implementation of structural reforms in order to boost growth and employment but also to secure the sustainability of the public finances. A significant issue to this end is the reform of the public administration and privatisations.

At the same time, several critical issues are still pending, including the government bills that will be discussed at the House regarding the public service reform, the autonomy of public hospitals, the implementation of the National Health Scheme, the approval by the Parliament of the bills on sale of loans as well as the privatisation of telecoms company CyTA and the unbundling of the electricity authority EAC. 

We hear a lot about how the new law regarding the packaging and selling of bank loans will finally help in dealing with the enormous problem of non-performing loans in Cyprus. I like to keep an open mind even when it is rather hard to identify how and from where the added value will come.

What do we know for sure?
The loans, mainly non-performing but not only, will be sold at huge discounts. Some experts go as far as predicting that the price to various funds and other anxious takers will be even below the amount provided for by the banks.

That in itself is very alarming as this will inevitably create further losses which will need to be covered by new capital. But the huge paranoia is with regard to the general belief, put forward by some politicians in particular, which suggests that if only we could somehow sell off the non-performing loans we will also get rid of the problem.

What they fail of course to point out is that loans (whether non-performing or not) are assets that the banks hold and which secure the repayment of deposits and other obligations they have. It is not serving anyone, least of all the tax payers, who will inevitably be called on to recapitalise a failed bank, to allow the current shareholders of our banks to sell off these assets at will and without regulating the price so as to ensure maximisation of value for the bank.

The other huge misconception is with regard to how people tend to look at non-performing loans (NPLs).

Politicians and “experts” such as the troika or even credit rating agencies keep referring to the mounting NPLs in Cyprus banks as the cause of our economic predicament. NPLs are nothing more than a symptom. The real problem is a choked economy mainly because of a massive private debt which emerged following many years of granting bad loans based on collateral and security considerations rather than a proper assessment of repayment capability.

These loans were levied by the Cyprus banks on the shoulders of unsuspecting, or at the very least, blissfully ignorant customers. The end result was that the equity base of most business enterprises was eradicated and consumer demand stifled, factors which are not conducive to new capital investment that the country now badly needs.

To be fair to the banks, they were not the only culprits. The Central Bank of Cyprus (CBC) was at best neutral if not actually encouraging, rather than controlling and managing, the inflow of deposits into Cyprus. It also failed to identify the risks and to regulate the huge (by our standards) expansion of our banks into unknown territories abroad.

The legislators also are up there in the list of culprits as they have facilitated legislation which encouraged rather than contained the uncontrollable money expansion from abroad. Other than the bankers themselves, some lawyers and accountants also have a primary share of the blame as they pursued their own and their clients’ very narrow interests irrespective of the collateral damage they were inflicting on the economy.

A number of lawyers and accountants, who went by the popular name tag of “introducers”, were instrumental in establishing and maintaining a “corrupt”, but thanks to the absent and pathetic stance of CBC, a largely legal system of funding inefficiency and waste in the grass roots of the Cyprus economy.

Pretending that the problem is the symptom is not helpful in finding a solution. Even if one puts aside the “who is to blame” game, facts are facts:

Fact 1, the economy is struggling.

Fact 2, our businesses have no real net worth since they owe all they have (and sometimes more) to the banks.

Fact 3, many of these businesses have invested the enormous flow of loan funds coming towards them so easily from the banks into land and unproductive uses.

Fact 4, there is a very weak and feeble demand for goods and services which impedes viability of existing and new businesses.

What are the possible solutions then? For a start, pretending that throwing more loan funds into the economy will help is an illusion. The banks already have excess liquidity. What they don’t seem to able to come up with are viable financing proposals. It is this that we need to solve in order to get the economy started again.

Why then is it so hard to find viable projects in Cyprus since the bail-in? The simple answer is that the economic agents (both at the corporate and the household level) are drowned in debt with hardly any savings to fall back on.

One may very well ask, but why is this so, since the “deposits by locals” in Cyprus banks are reported to be very high? The answer is simply that despite the fact that they are presented as local deposits, these in truth are mostly foreign owned. Since 2011 the deposits by Cyprus companies which are foreign owned are considered for statistical purposes as local. Moreover, these foreign owned companies, if not just vehicles of convenience and therefore dormant, hardly conduct any of their business activities in Cyprus. And that reveals the true magnitude of the mismatch between the loans held by the banks as assets which are almost exclusively weighing on Cypriots and the deposits which are predominantly foreign owned.

Another aspect of this unstable foundation of our banks is that the deposits are solid and “cast in stone” while the assets (loans mainly) are toxic and are deteriorating by the day. This is a very unhealthy base on which to build and grow the economy from. An investor, whether local or foreign, will have to consider the country risk emanating from such unsteady economic foundation.

This is not a problem that can be easily fixed. And yet, it is one that our government has brushed aside. Possibly on the wrong advice by special interest groups, the government has rushed into a campaign to attract new capital investment to Cyprus, ignoring the fundamentals of our situation and wishfully thinking that potential investors will follow suit. But the truth is that no potential capital investor worth having will be one who does not carefully study and takes into consideration the risks involved. To be over eager to attract foreign investment by lowering the hurdle and in essence to be willing to “bribe” potential investors to do a project that is less than average is not the way that a prudent government pursues economic development.

We have to get serious in order for others to take us seriously. Sound investments are not undertaken over a drink or through government PR events. It reminds me of the pathetic attempts by President Christofias to close a deal for a non-viable hotel and resort project next to the Hilton in Nicosia. Another tragic example we are still living through is the natural gas investment scenarios put up and changed every few months by the government.

Where does it end? When will we finally get our house in order and try to understand what our options are and what is really at stake before we start talking to others about it? As Theodore Levitt wrote in his classic paper “Marketing Myopia” (paraphrasing from Lewis Carroll’s Alice in Wonderland) “if you don’t know where you are going, any road takes you there“. Perhaps our government intentionally or unintentionally prefers such vagueness and ambiguity rather than being confined to pursuing what is right and then to be held accountable if it fails to achieve it.

Which brings me to the main problem bugging the Cyprus economy, which in project finance terms is called “market risk”. As mentioned above, economic agents in Cyprus (corporate and individuals) suffer from the same over-borrowing syndrome. This manifests itself in under-capitalised enterprises and a feeble demand in the local market for most goods and services other than perhaps necessities such as food, beverages and medicine. Any new capital investment, whether from home or abroad, has to have a healthy supporting infrastructure of products and services which will enable it to be competitive but even more importantly a strong and sustained demand for its products or services.

The latter is probably a much bigger obstacle to potential viability and therefore a deterrent to new investment. There is however a possible way out of the low demand trap by focusing first and foremost on tourism and export oriented projects. This will likely generate demand that spills over to local businesses, ones that provide supporting products and services, and will also increase local income through employment which will improve demand in general.

But in order to boost the supply of tourism related projects and others which do not primarily rely on local demand it is necessary to address the private debt problem which is suffocating the industry and also manifests itself as the bulk of the non-performing loans in our banks.

To this effect, I have been proposing, for two and half years now, the creation by the government of a special Development and Investment Bank (DIB) to deal with the need to restructure big projects in distress and to foster and accelerate the pace of economic development. The DIB will provide for the need to have equity and quasi-equity instruments in place to support the need to replenish the depleted equity capital base of potentially viable businesses. The new institution would be manned by experts from Europe and Cyprus in project finance solutions and would assist commercial banks and their existing customers to reach amicable and economically viable solutions in newly formed special purpose companies.

It will probably be necessary to also create National Asset Management Company to hold and manage the bank assets which cannot be done within a bank. This company would manage the assets and the recovery process as well as to act as a repository of components (building blocks) which the DIB would use to put together new viable  special purpose vehicles to be spun back into the economy with a strong equity base and with a manageable debt to carry.

Why has not a major repair job at the core of our ailing economy happened yet? The truth is that the government is more concerned with the shop window rather than the shop itself. It is building up fake hopes by projecting false expectations, such as the quick exit from the memorandum of understanding with the troika and/or the return to government borrowing from the markets as indicators of their own success. And because politicians in Cyprus have a long history of not caring to go beyond what they think they can get away with, once again, they choose the easy route out.

Pursuing the substance is at best a secondary objective which is only adopted if it comes at zero cost and most importantly does not put in doubt the “economic miracle” fantasy they are building up towards. In all my attempts to push for these ideas with the government, we always hit a brick wall when it comes down to their willingness to fund these initiatives. The saddest thing is that it seems to me that the main reason the government did not buy into these proposals was not because they were not convinced that they would work, but rather because it is rather unlikely for such ventures to bear fruit soon enough for a political gain, and the cost of funding them may derail the accomplishment of their pseudo aims which will help them claim economic success with the voters. Déjà vu!

By Savvakis C Savvides

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. 

Greece’s leftist government suspended plans on Wednesday to increase tax on rental incomes after a public outcry, saying it was still negotiating with international lenders on required reforms ahead of key parliamentary vote this week.

Parliament is expected to approve a set of austerity measures and reforms agreed with its EU/IMF creditors by Friday. Athens needs the legislation to receive a positive first review and get the next instalment of a 86 billion euro bailout that is keeping the state afloat.

Prime Minister Alexis Tsipras, who clinched the bailout deal in July after going back on pledges to end austerity, wants Athens to wrap up its review quickly and start talks on much-needed debt relief by the end of the year.

But the re-elected premier’s plans still face resistance in a country that has suffered six years of recession and is worn down by austerity. Labour unions have planned protest rallies outside parliament on Friday.

“The minister responsible announced that the tax would not be increased,” government spokeswoman Olga Gerovassili said acknowledging that there were protests against the hikes. “The negotiation, the effort to win as much as possible, continues.”

About three-quarters of Greeks own their homes and many rent out their property. But due to the crisis, tenants have increasingly failed to pay their rent and the tax measure would further burden owners who already pay high property taxes.

The proposed increase was slated to raise 200 million euros.

It was unclear whether the country’s creditors had consented to the latest changes, but a source close to the lenders said what mattered was that the measure be included in a planned income tax reform before the bailout review.

Gerovassili said negotiations on the bill would continue until Friday night and there could be more changes.

The package also scraps a law that allowed the state to collect rental income directly from tenants rather than making owners pay tax on uncollected rents. Athens said it wanted to find alternatives.

“We are in talks… and we are trying to find which amendment will replace it,” Deputy Finance Minister Tryfon Alexiadis told lawmakers.

In his Independence Day address, President Nicos Anastasiades on Thursday night said a new window of oppurtunity had opened, reigniting hope for a final solution to the Cyprus Problem.

In his address, which was broadcast live on state television, Anastasiades said: “The anniversary of the declaration and establishment of our state is an opportunity for deep deliberation of the path we have followed all these years”.

This he continued was because: “The creation of the Republic of Cyprus, instead of being the start of a new, hopeful course, unfortunately became an element of hostility and division between the two communities making up the Cypriot people”.

Anastasiades said that from the start neither of the two communities had put trust in the bicommunal character of the new state, instead considering it either a temporary condition or a springboard for the completion of foreign plans.

“Instead of building bridges of creativity we barricaded ourselves behind unachievable and conflicting goals,” he added.

This, the President continued, created ideal conditions for third parties to intervene “serving their own interests with the result leading us to the tragic events of 1963-64 and what followed to end up with the destruction of 1974”.

Anastasiades said that what followed was an unacceptable situation that continues to this day “keeping our homeland divided and 37% of the land under Turkish occupation”.

Referring to past efforts to solve the Cyprus Problem, Anastasiades went on to say: “Today we have before us a new window of opportunity which has revived our hope for a final settlement of the Cyprus Problem”.

He said this hope was cemented by his conviction he and Turkish Cypriot leader Mustafa Akinci “share the same determination and courage, mutual respect and sincerity, to, through dialogue, make the common vision of our people for peace and prosperity a reality”.

He said negotiations had led to the discovery of common ground but acknowledged there was still work to be done.

“I would like to assure you that my main priority is to reunite our land, taking into particular account the sensitivities and historical concerns of both communities,” Anastasiades said.

Addressing both Greek Cypriots and Turkish Cypriots, Anastasiades said he would repeat what he recently tod the General Assembly of the UN, that the conditions of a long-term, viable and functional solution would be one centred on respecting the rights of all those involved.

This solution, he said, would be one that would not create winners or losers.

The President also added Cyprus should use its EU membership towards gaining this solution.

“It is time for us to make use of our accession to the European Union to achieve a solution that will make our country and its citizens truly equal to other European citizens,” Anastasiades said.

incyprus — 01/10/2015

 

   

European Union leaders could promise billions of euros in new funding for Syrian refugees at an emergency summit on Wednesday night where they will also try to patch up bitter divisions over the migration crisis.

Meeting for dinner a day after interior ministers overrode furious objections from four eastern states in a vote that will distribute asylum-seekers around the bloc according to mandatory national quotas, government leaders will try to focus on ways to curb the inflow of migrants that has hit records this summer.

But feelings are running high as chaotic crowds and varied responses from national capitals have seen borders close inside Europe’s cherished passport-free Schengen zone and diplomats expect “theatrics” from some of the 28 leaders as each seeks to shore up domestic support in the face of fears of immigration.

“Today … a concrete plan must finally appear in place of the arguments and the chaos we have witnessed in the last weeks,” said European Council President Donald Tusk, who will chair the 28 leaders’ first full EU summit in three months.

On a day when the Greek island of Lesbos saw 3,000 people land in dozens of dinghies from Turkey, Tusk said arrivals that already exceed half a million this year were likely to increase and that Europe must “regain control of our external borders” or risk destroying the Schengen system and the “European spirit”.

He forecast agreement on more help for refugees who stay in the Middle East, via funds for UN agencies, Turkey, Jordan, Lebanon and others. “Frontline” states like Greece and Italy should also get help on their frontiers – notably to register new arrivals and deport those who do not qualify for asylum.

Around the Council table, German Chancellor Angela Merkel may face criticism of her move last month to take in more Syrians, an action some say fuelled the inflow.

The German leader stressed on arrival that it was time for Europeans to work together. “Faced with a great challenge, it cannot be that Europe says ‘We can’t handle this’,” Merkel said.
“That’s why I say again and again: We can do this.”

Re-elected Greek Prime Minister Alexis Tsipras and Italian Prime Minister Matteo Renzi will hear calls from the north to use new EU support – both in money and manpower – to tighten controls on the bloc’s Mediterranean frontiers.

Establishing a principle of “relocating” some asylum-seekers has been a key demand of Rome in particular, which wants to end a rule that states they should remain in the first EU state they enter. Northern countries accuse Italy and Greece of undermining the Schengen area by simply letting migrants move on unchecked.

Renzi said a package of EU-run relocations and deportations and EU-funded frontier forces meant Rome’s partners had finally accepted demands it has been making for years to spread the load of migrant arrivals from Africa onto southern Italian islands.

Hungary’s prime minister, Viktor Orban, was expected to offer a typically robust defence of the razor-wire fencing he has erected to keep out migrants and his view, shared in some other ex-communist states, that Muslim immigration is unwelcome.

He insisted he was only following EU rules and said that if Greece could not defend its borders, Athens should ask for help.
His Slovak ally, Prime Minister Robert Fico, said he would challenge in EU courts Tuesday’s rare majority-vote decision to impose quotas on states for taking in up to 120,000 asylum-seekers, mainly from Italy and Greece.

“We have been refusing this nonsense from the beginning, and as a sovereign country we have the right to sue,” Fico said.

However, many leaders and the EU officials organising the summit – which will not take formal legal decisions – are keen to put the row over “relocation” behind them for now.

Collectively, national leaders may be chided by Jean-Claude Juncker, the EU’s chief executive whose Commission named 19 countries for breaches of EU asylum laws: “One of the reasons why the asylum system … isn’t working is because member states do not apply it,” said Juncker’s deputy, Frans Timmermans.

Turkey, locked in a long love-hate relationship with Europe and through which the bulk of the summer’s migrants have reached Greece, may hear promises of up to two billion euros to help build schools and provide for the welfare of the two million Syrians it has accommodated from the civil war.

Johannes Hahn, who deals with the EU’s neighbours as a member of the executive Commission, said on Wednesday that a trust fund established to help Syrian refugees across the region, including in Jordan and Lebanon, could reach one billion euros on a mix of pledges from the EU and the member states.

The Commission, among proposals adopted at its weekly meeting on Wednesday, also called on them to reverse cuts in their funding for the World Food Programme.
Overall, Juncker said, the EU had doubled the funds targeted to deal with migration to 9.5 billion euros.

Noting plans to install “hot spots” on the Mediterranean where seconded EU officials will document arrivals and try to speed the deportation of those not qualifying for refugee status, Commission First Vice President Timmermans said.

“The most urgent thing we need to do is to make sure we can fingerprint and register everyone who arrives so that we can make a distinction between those who potentially have the right to asylum and people who are migrants who don’t.”

By Alastair Macdonald and Robert-Jan Bartunek

 

THE FOLLOWING article by the law firm of L.G. Zambartas LLC explains the implications of the recent changes to the Cyprus Wills and Succession law and the introduction of an EU regulation – and the steps that you should take to ensure that any assets (including property) that you own in Cyprus are disposed of in accordance with your final wishes.

Although this article was written for a British audience, the recent changes to the law apply to all EU citizens: On August 17th, 2015 the EU Regulation number 650/2012 regarding International Jurisdiction and the applicable law relating to Wills and Succession in European Union countries, was adopted by Cyprus. This has resulted in the amendment of the Cypriot Wills and Succession Law, Cap. 195, as below. In Cyprus, the main change regarding Cap. 195, is that Clause 42 has been deleted. Clause 42 provided that any person whose father was born in the UK or in any other member of the Commonwealth, may, whether domiciled or not, dispose all of his moveable and immovable property to any person by leaving a Will.

Therefore the provisions of forced heirship stated in Clause 41 of Cap. 195 were avoided. In accordance with the provisions of forced heirship, if the testator has a spouse and children and afterward dies, then the heirs are entitled to inherit only the ¼ of his estate by Will and the rest ¾ will be shared among the heirs, according to the said Law.

By the adoption of the above Regulation, British citizens who have a Cyprus Will are currently subject to Cyprus provisions of forced heirship, if they die on August 17th, 2015 and onwards. This means that they are unable to dispose their Estate, both moveable and immovable, by Will, as they wish. However, under the above Regulation, EU citizens, including British citizens, who are not domiciled in Cyprus, will have a choice which law shall apply to their Wills at the time of their death.

The choices they have are the following: a) The UK Law (Domicile of origin) or b) Cyprus Law (Domicile of habitual residence). In practice, this means that in the case of British citizens living in Cyprus with a current Cyprus Will, a Codicil to their Will must be signed and deposited to Court, with which they will clearly state that their Estate shall be governed by English Law, in order the applicable Law to their Wills to be the UK Law, covering their Cyprus assets. In such a way the Cypriot Law for forced heirship will not apply.

By: Louise Zambartas 

European Union countries should share more banking risks, the chairman of euro zone finance ministers Jeroen Dijsselbloem said on Saturday, indicating support for a plan to set up a EU-wide guarantee for bank deposits which is opposed by Germany.

“The way we have built the banking union so far is to deal with risks in our banking system and at the same time talking about sharing risks. That approach has to be taken further,” Dijsselbloem told reporters ahead of a meeting of euro zone finance ministers in Luxembourg.

European Commission President Jean-Claude Juncker said in his state of the union speech to the EU parliament on Wednesday that he would soon make a concrete proposal on steps towards a European deposit insurance/reinsurance scheme.

But Germany opposes the idea of setting up a EU-wide guarantee, fearing its accumulated funds could be used to guarantee the deposits of savers in other European countries.

The common deposit guarantee would represent the third pillar of a European banking union, an initiative designed to strengthen the financial sector in response to the sovereign debt crisis.

The 19 countries sharing the euro have already agreed on a single bank supervisor and a Single Resolution Mechanism (SRM)for winding up failed banks, with the costs to be covered from a dedicated fund, filled by the banks themselves.

A German government document prepared ahead of the euro zone finance ministers’ meeting said that before such a scheme could be introduced, the two existing elements of the banking union should be fully implemented and tested.

“My understanding is that (German Finance Minister Wolfgang) Schaeuble said we must reduce risks in the banking systems and he would rather talk of that side of the medal, but there are two sides of the medal,” Dijsselbloem told reporters.

“There is the side of reducing risks and at the same time building a more risk sharing system. We have to take both approaches at the same time as far as I am concerned,” Dijsselbloem added.

The issue will be one of the main points of discussion of the finance ministers of the 19 countries sharing the euro on Saturday.

But they will also discuss on Saturday if the euro zone’s single resolution fund (SRF), which is to cover the expenses of winding down a bank, should at the start get a credit line from the euro zone’s bailout fund, the ESM.

The SRF, which will start in 2016, will be financed from annual contributions from banks, but it will only reach its target size of 55 billion euros after seven years.

The Commission and the ECB argue that until then it should get bridge financing directly from the ESM in the form of an open credit line, similar to the credit line enjoyed by the Federal Deposit Insurance Corporation in the United States.

Germany and Finland oppose this idea, sticking to the initial agreement that the ESM should only lend to governments, not to institutions like the SRF. To allow it, euro zone countries would have to change the ESM treaty.

By Francesco Guarascio

 

The Central Bank of Cyprus instructed banks to submit on a quarterly basis information on the progress in their restructurings of loans in arrears based on target indicators it set aiming at helping banks decrease their 90 days past due exposures and prevent 30 days past due from increasing.

The targets will apply to the whole loan portfolio and to sub-portfolios four, namely mortgages, other loans to households, loans to non-financial firms up to €1m and loans to financial firms over €1m, the central bank said in an emailed statement today. The first submission of this type of information will concern the quarter that ended in June.

“For this quarter banks were asked to submit their actual performance in relation to the four indicators and their targets for the third and fourth quarter of 2015,” the central bank said. “The submission for the next quarter, that is for the quarter ending on September 30, 2015, banks are required to submit their actual performance for the third quarter of 2015 and their revised targets for the fourth quarter of 2015 and the first quarter of 2016”.

In the case banks fail to meet the targets set by the central bank, they will have “to provide detailed explanations” and inform the supervisory authority about the measures aiming at rectifying the situation they intend to take, the central bank said. “The Central Bank of Cyprus has imposed an upward revision of the banks’ targets in cases where it considered that the targets set by the banks were low. With every new submission the Central Bank of Cyprus will be reviewing and revising the targets on the basis of the developments”.

The first performance indicator concerns “proposed sustainable solutions as a percentage of the loans presenting arrears over 90 days,” the central bank said adding that the second indicator will reflect the situation of “concluded sustainable solutions”.

The third indicator will provide information about restructured loans which show arrears of less than 8 days, as a percentage of total restructured loans, it said. Loans in arrears over 30 days and up to 90 days at the beginning of the quarter which at the end of the same quarter do not present any arrears either because of restructuring or other measures taken by the bank, will make out the fourth indicator.

By Stelios Orphandies

 

Earnings in the private sector, excluding banks, continue to drop and this may go on for as long as the unemployment rate remains persistently high, an employer business group spokesman said.

“There is an oversupply of labour which cannot be absorbed by the new vacancies created,” Michael Antoniou, deputy director of the Employers and Industrialists Federation, widely known by its Greek acronym OEV, said today in an interview.

“In some cases, where companies reach their limits, they continue to resort to cost cutting, while others which have not done so in the past may do so now gradually. The private sector did not react in a uniform way after what happed in 2010 or 2011”.

Antoniou, who is also in charge of the labour relations department of the business group, said official figures showed that the drop in average earnings in the economy continues, well into 2015, even as the situation with respect to workers earnings “stabilised in the public sector and banks”.
Average earnings dropped an overall 11 per cent in the public sector as a result of the fiscal consolidation measures agreed by the previous government in 2011 and 2012 with civil servants union PASYDY, he said. Workers at Bank of Cyprus and the cooperative banking sector saw their earnings drop 15 per cent on average following the 2013 banking crisis, while in the rest of the banking system, earnings shrank by up to 9.5 per cent.

“In the rest of the private sector, pay cuts were comparable or higher compared to those at Bank of Cyprus,” he said.

According to Cystat, the downward trend in employee earnings started in the third quarter of 2012 and continued until the first quarter of 2015, for which the latest available figures apply. Average workers monthly earnings fell a total of 5.7 to €1,879 in these 11 quarters, with men suffering the largest cut in earnings. Male workers earned in the first quarter of 2015 €2,037 on average a month, which is 6 per cent lower compared to the second quarter of 2012, while those of female workers fell average a 5 per cent to €1,703. The figures apply to gross earnings as reported to the social insurance register, include both the public and private sector excluding persons employeed in private households.

In January to March 2015, average workers earnings dropped an annual 1.8 per cent and a quarterly 0.4 per cent. Cyprus’s unemployment rate stood in June at 16.2 per cent and was the third highest in the European Union, according to Eurostat.

“One could reasonably come to the conclusion that earnings continue to drop in the private sector,” Antoniou said. He also expressed doubt about the informational value of the Cystat figures saying that that overall pay cuts in the economy exceeded the reported values.

“These figures show some other kind of data rather than the extent to which wages dropped in the economy,” he said. “That is being recorded is the situation of a body that is continuously being transformed. In reality, where you have either voluntary or mandatory retirements, those who retire are the ones with the higher earnings as the latter already have matured”.

“The renewal of staff could hence demonstrate a decrease which could be in small percentages,” he added.

By Stelios Orphanides