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The Board of Directors of Bank of Cyprus (BoC) is expected to decide at a meeting today whether to proceed with the creation of a separate unit, a “development bank”, to help deal with the problem of non-performing loans (NPLs).

The possible separation was mentioned by Chairman Christis Hassapis after a meeting of the Board with President Nicos Anastasiades yesterday. However Hassapis clarified that they were not talking about a so-called `bad bank`.

Rejecting allegations of disagreement on the issue among the members of the Board, Hassapis said that the entire Board was talking about a “development bank” and discussing the most appropriate way of setting it up. For that reason, he said, they have hired HSBC who was expected to brief the Board today.

Hassapis also made it clear there was no political pressure on dealing with the NPLs, or any conflict with the CEO of the Bank John Patrick Hourican, as reported in the media.

Regarding the NPLs, Hassapis said there is at present a special unit within the Bank, consisting of about 500 people led by Euan Hamilton, former Deputy Chief Executive of Royal Bank of Scotland. He added that the Bank had also called in four experts from KPMG London to help in the process of restructuring these loans.

“We are moving ahead, in the right direction, with the proper planning,” he added. Hassapis described the meeting with the President as “a very good meeting” saying that BoC, as a systemic bank, influences and is influenced by the economy.

The CEO of BoC, John Hourican, said that he had not experienced any political pressure on the issue of the NPLs.

“I think is really important that you understand that we are dealing with every borrower in a very specific and deliberate way, to recover the bank`s position and to ensure that we treat them fairly,” Hourican told journalists.

“There`s a consideration in a professional way by the board of the bank of the various options that are available to us and this is a matter of discussion and debate and we have not concluded on what we are need to do but we are looking at all options as you would expect us to do”, he said.

“We have stabilized the asset quality of the bank during the last six months and it is our job to explore all options to try and accelerate the progression of the bank against its recovery plan. We are running ahead of our recovery plan today and it is our job to try and accelerate that journey to ensure that we contribute to the recovery of Cyprus”, he added.

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