Cyprus-Forum.com

[Maximus]

I don't know the official meaning Pyro. I am sure the EU has specific criteria on what is performing and what isn't.

But non-performing loans in my layman's understanding, is a loan given to an unqualified and non creditworthy customer or entity that isn't able to meet payments.

Either way, it isn't just Cypriot Banks that fall under the European Central Banks descriptor. There are many, and most are doing well and don't seem to have the problem.

What I believe is responsible is OUR STUPIDITY. I truly believe we are stupid people.

Why? Because we welcomed Billions worth of Russian investment without thinking about the liabilities that the banks were exposed to. These are Banking liabilities and this forced the Banks to lower their lending practices because if they didn't lend out Billions, their business is not viable.

So they started giving out loans to every Malaka so that they can buy a luxury Mercedes.

A non performing loan is simply a loan that is not being serviced anymore.

Someone could have been making payments, with the means to continue but they may have lost their job.

The bank can only do so much due diligence.

At the end of the day, banks are private corporations. Not every proprietor that goes belly up should be prosecuted and not every defaulting creditors should be prosecuted either.

Every bank only guarantees your money up to a certain amount. Beyond that, you are taking on some risk.

What liability exists from taking deposits, whether they be from Russia or the UK?.

A Bank has many ways to protect themselves.

For instance, they can take collateral over a property or land. Also, leverage the loan against the security.

When the loans become non performing, and the customer doesn't communicate with them, then they need to foreclose.

As hard as it is, yes a Bank should take over the house, cars or whatever to discharge the debt. It is better to do this that to go Bankrupt and then do over all depositors over 100,000, which is what actually happened.

People need to understand that taking out a loan is a commitment. If you lose your job, you either got to restructure or drive a cab. But you got to do something.

Right, then you have so many homeless people and you have to dip in to the social security pot. It is like taking from the left and giving from the right.

What do you do then?

[Paphitis]

I don't know the official meaning Pyro. I am sure the EU has specific criteria on what is performing and what isn't.

But non-performing loans in my layman's understanding, is a loan given to an unqualified and non creditworthy customer or entity that isn't able to meet payments.

Either way, it isn't just Cypriot Banks that fall under the European Central Banks descriptor. There are many, and most are doing well and don't seem to have the problem.

What I believe is responsible is OUR STUPIDITY. I truly believe we are stupid people.

Why? Because we welcomed Billions worth of Russian investment without thinking about the liabilities that the banks were exposed to. These are Banking liabilities and this forced the Banks to lower their lending practices because if they didn't lend out Billions, their business is not viable.

So they started giving out loans to every Malaka so that they can buy a luxury Mercedes.

A non performing loan is simply a loan that is not being serviced anymore.

Someone could have been making payments, with the means to continue but they may have lost their job.

The bank can only do so much due diligence.

At the end of the day, banks are private corporations. Not every proprietor that goes belly up should be prosecuted and not every defaulting creditors should be prosecuted either.

Every bank only guarantees your money up to a certain amount. Beyond that, you are taking on some risk.

What liability exists from taking deposits, whether they be from Russia or the UK?.

A Bank has many ways to protect themselves.

For instance, they can take collateral over a property or land. Also, leverage the loan against the security.

When the loans become non performing, and the customer doesn't communicate with them, then they need to foreclose.

As hard as it is, yes a Bank should take over the house, cars or whatever to discharge the debt. It is better to do this that to go Bankrupt and then do over all depositors over 100,000, which is what actually happened.

People need to understand that taking out a loan is a commitment. If you lose your job, you either got to restructure or drive a cab. But you got to do something.

Right, then you have so many homeless people and you have to dip in to the social security pot. It is like taking from the left and giving from the right.

What do you do then?

No you don't.

It is much better to foreclose on these bad loans than to hit savers - like for instance and just imagine, selling a property in Australia and depositing your life savings into a Laiki Bank account and losing 90%. I don't believe situations like this are uncommon either. These are just lower to middle class people that were destroyed financially. All they wanted to do was move to Cyprus.

The borrower, never had the house before the loan, and was only able to buy the house because they Bank settled the money. So they just go back to square 1 and can move back with family or rent a cheap apartment and there is no shortage of those. No need for them to be homeless.

Don't get all socialist about me by saying what about the homeless? That isn't an argument. You got to service your loan or else. No free rides. Swim or sink.

But taking away depositors money over 100,000 to cover the bad debts, was something the Banks should never have let happened, and because they did that, there should have been repercussions because eiether,:

1) their lending criteria wasn't so diligent,
2) they were unwilling or not allowed by the Government to foreclose because that creates "homesless".

Either way, I look at all this and think it is a joke. Cyprus Banking system is a joke, CySec is a joke, and the Government is a joke for not holding these Banks to account or letting them do what is necessary to maintain a healthy lending Book by foreclosing on their bad loans.

Maybe the Banks didn't have a choice because of all the Russian deposits. I don't know why. Maybe the Government didn't hold the Banks accountable because it is in fact the Government that is to blame because of either:

1) Russian money flooding the Banks with liabilities,
2) or because the pussies in the Cyprus Government wouldn't let the Banks foreclose on bad debts - which means seizing securities.

So I really don't know who is to blame between banks and Government. Maybe both are to blame and they are protecting each other.

What I do know is that the whole situation stinks and it was criminal alright and someone is responsible and those people should have been held accountable.

Things like this undermine Cyprus.

[Maximus]

I agree, and it makes sense that if you give a loan for a substantial amount then you need some form of collateral. At the least, the property belongs to the bank. I am just referring to the sheer number of foreclosures that would have had to be enacted and the money supply. There still would have been a shed load of homeless people that would need to be rehoused and money would have had to be found from somewhere to solve that problem.

I dont see what this has to do with Russian deposits though. That was all propaganda and a political stunt in my opinion to push the haircut.

At the end of the day, the bank went under (not the first in any country to do so) and everyone's deposits up to 100k euro was guaranteed.

[Paphitis]

I agree, and it makes sense that if you give a loan for a substantial amount then you need some form of collateral. At the least, the property belongs to the bank. I am just referring to the sheer number of foreclosures that would have had to be enacted and the money supply. There still would have been a shed load of homeless people that would need to be rehoused and money would have had to be found from somewhere to solve that problem.

I dont see what this has to do with Russian deposits though. That was all propaganda and a political stunt in my opinion to push the haircut.

At the end of the day, the bank went under (not the first in any country to do so) and everyone's deposits up to 100k euro was guaranteed.

There is no doubt the situation escalated and was probably beyond anyone's control at that point. It was probably too late.

But the questions are:

1) what caused it? Was it Russian Money? Was it the Banks getting greedy and lending out on the Greek Market which was unsustainable?
2) Who is responsible?
3) Could it have been avoided?
4) was their any criminality on the Banks boards?
5) What can be done to avoid this occurring again?
6) Do we have an independent regulator and cop with the teeth to hold the Banks accountable?

I don't know if the Russians are responsible or not. All I know is that deposits are liabilities. When the Russians deposit their Billions into tiny Cypriot banks (yes the reality is that BoC and Laiki were tiny compared to Commonwealth Bank for instance which is worth about 500 Billion), then that may have forced their hand.

You can bury you head in the sand all you want Max, but the Russians are very bad news for us, and you only only cheating the young who will not be able to buy a house soon enough.

I believe the Cyprus Financial Crisis was avoidable.

Sure people's deposits up to 100,000 are covered. But what about those families that had 1 million worth of deposits and that was it? There were a few of those. Imagine getting wiped out like that? That is unfair.

The Cyprus Crisis has teached me to do the following:
1) don't deposit major money in Cypriot and Greek Banks.
2) Don't borrow money or have major accounts in Cypriot or Greek banks.
3) find massive British, European or American Banks that have some infrastructure in cyprus to conduct your business, and look into their financials,
4) don't touch CySec or Cypriot stocks.

Am I right or wrong?

[Maximus]

Simply, dont have more than what the deposit guarantee is, deposited per bank. It does not matter if they are Cypriot banks.

The other banks in Cyprus were healthy.

It was not the Russian money that caused it,

It was the sheer number of non performing loans, plus people taking out mortgages in CHF exposing themselves to exchange rate risk, investing too much in Greek bonds that went belly up, and maybe some other things.

It probably could have been avoided but there were too many contributing factors to put the finger on one specific thing.

The economic cycle naturally goes up and down.

Many countries in Europe were down.

[Paphitis]

Simply, dont have more than what the deposit guarantee is, deposited per bank. It does not matter if they are Cypriot banks.

The other banks in Cyprus were healthy.

It was not the Russian money that caused it,

It was the sheer number of non performing loans, plus people taking out mortgages in CHF exposing themselves to exchange rate risk, investing too much in Greek bonds that went belly up, and maybe some other things.

It probably could have been avoided but there were too many contributing factors to put the finger on one specific thing.

The economic cycle naturally goes up and down.

Many countries in Europe were down.

I understand that Maximus regarding the 100,000 guarantee.

But not everyone is as clever as you and I.

Now imagine, Cypriot pensioners in Australia, who in reality take this for granted, sell their house and deposit their life worth of 1 million odd Euros into a Laiki Bank account to retire on in Cyprus.

Then they end up with 100,000 Euros. These people were just naive and innocent. This is a case I heard of through the grapevine and I am sure they are not alone.

You can't be certain about the Russian money not being responsible. Cypriot Banks were the only Banks to collapse like that in the EU.

What is so different about the Greek and Cypriot banks than every other country?

A lot of countries were down yes. That was a mere downturn yes, but our Banks didn't fail and our countries didn't need to go to the IMF for bailouts. We just had an ecomic downturn where our growth just stopped or slowed, slightly higher unemployment and low inflation.

[Maximus]

This is what you get with a liberal (AKEL) government.

Every becomes equally poor.

[Pyrpolizer]

Paphitis,

You are talking with the eyes of an outsider, who only reads the headlines.

For a start the term "non performing loans" according to the current definition is a non serviced loan for 3+ months. It was always like that for the Banks, but not so for the Coop.
This is the reason why after we joined the Eurozone and our Central Bank got hijacked by the European Central Bank the Coop became a red target for the ECB and eventually forced to close down.

This Coop was the backbone of agriculturists and the farmers for a whole century, and before that the peasants were simply in the hands of loan sharks charging 100%+. When the Coop came up they would lend the farmers the money to buy their seeds and fertilizers and pay at harvest time usually once per year. So basically all their loans were technically speaking "non performing".
However this is how this poor low class eventually started making a living providing primary wealth to the economy. I saw people crying when the Coop closed down a couple of months ago, saying that without the Coop they would never build a house or feed their families or educate their children.
The term "non performing" as it applies today and as the ECB wanted it to apply for the Coop as well, was actually an unknown term to the Coop.

Then you have to look at Cyprus’ economy during recent years.
We had a STEADILY rising economy from 1980 to 2006 (peak bubble year). Let’s give that an index of 100. Notice at 2006 Tassos was the president and it was during his term that the economy reached the peak of the bubble! In fact the downhill started during his term…

2004 - index 72
2005 - index 68
2006 - index 100 (Tassos peak bubble)
2007 - index 84
2008 - index 68 (Christofias took over)
2009 - index 64
2010 - index 40 (about the same as in 1994)
2011 - index 38
2012 - index 28
2013 - index 8 (haircut after Anastasiades took over)
2014 - index 12

Now let’s set things straight here. Up until 2006 the non performing loans at the Banks were always in the range of 5%, which was quite normal.
Around 2010 when the bursting of the bubble already started having visible effects, the ECB started this funny "stress tests" to check our Banks. From what I remember no one passed the tests.
Notice again that under the Euro our Central Bank was NO LONGER under the control of the Government but under the control of the ECB. Notice how they basically designed the collapse of Laiki (which was then constantly getting ripped off by Vgenopoulos).
Laiki was an excellent Bank, super modern and efficient, in fact much better than BOC. And look what happened to it.

The final blow on the economy was in fact done when Anastasiades accepted the haircut on Laki’s deposits and it’s closing down (via blackmail from both the ECB and the IMF). Laiki could have survived, just like BOC did, who in just 3 years paid back all it’s ELA, but that’s a different story.

The 2013 haircut, basically killed all our economy, resulted to about 75% of the business going down to nearly zero, unemployment rising to record high, and even those who kept their jobs getting paid below the poverty level. As if this was not enough, the ECB suddenly realized that the loans were not performing any more! Wow what an unexpected surprise!

The NPLs at the Coop suddenly appeared to be 90%. At BOC about 70%. Hellenic Bank was the only Bank that was not exposed to the Greek bonds and therefore lost nothing from that. Yet even she suddenly appeared with 70%.

The question after that was what to do with these NPLs?
Let the Banks (all banks) go bankrupt?
Throw half the population out in the streets taking their homes? Who would buy all those properties and at what price? Should the Banks became real estate agents?
Save the Banks or save the people? Banks without people=0. People without Banks=0.

They eventually decided to give it time. This is the only way, wait for the economy to recover, unemployment to go down, people to start gaining more money, so that they would pay back their loans.

In summary it’s not a simple situation as you think and there were many factors that caused it.
Corruption in the Banks (with the exception of Vgenopoulos ripping off Laiki) was NOT the main reason.
Imo the biggest mistake we ever did was joining the Eurozone giving those criminals the control of our Central Bank and the chance to do the biggest crime they could ever do to us by forcing us to steal people’s deposits, at the precise time that our economy was going down the first bubble we ever had. Of course the target was always the Russian depositors but that’s a different story….

[Paphitis]

Paphitis,

You are talking with the eyes of an outsider, who only reads the headlines.

For a start the term "non performing loans" according to the current definition is a non serviced loan for 3+ months. It was always like that for the Banks, but not so for the Coop.
This is the reason why after we joined the Eurozone and our Central Bank got hijacked by the European Central Bank the Coop became a red target for the ECB and eventually forced to close down.

This Coop was the backbone of agriculturists and the farmers for a whole century, and before that the peasants were simply in the hands of loan sharks charging 100%+. When the Coop came up they would lend the farmers the money to buy their seeds and fertilizers and pay at harvest time usually once per year. So basically all their loans were technically speaking "non performing".
However this is how this poor low class eventually started making a living providing primary wealth to the economy. I saw people crying when the Coop closed down a couple of months ago, saying that without the Coop they would never build a house or feed their families or educate their children.
The term "non performing" as it applies today and as the ECB wanted it to apply for the Coop as well, was actually an unknown term to the Coop.

Then you have to look at Cyprus’ economy during recent years.
We had a STEADILY rising economy from 1980 to 2006 (peak bubble year). Let’s give that an index of 100. Notice at 2006 Tassos was the president and it was during his term that the economy reached the peak of the bubble! In fact the downhill started during his term…

2004 - index 72
2005 - index 68
2006 - index 100 (Tassos peak bubble)
2007 - index 84
2008 - index 68 (Christofias took over)
2009 - index 64
2010 - index 40 (about the same as in 1994)
2011 - index 38
2012 - index 28
2013 - index 8 (haircut after Anastasiades took over)
2014 - index 12

Now let’s set things straight here. Up until 2006 the non performing loans at the Banks were always in the range of 5%, which was quite normal.
Around 2010 when the bursting of the bubble already started having visible effects, the ECB started this funny "stress tests" to check our Banks. From what I remember no one passed the tests.
Notice again that under the Euro our Central Bank was NO LONGER under the control of the Government but under the control of the ECB. Notice how they basically designed the collapse of Laiki (which was then constantly getting ripped off by Vgenopoulos).
Laiki was an excellent Bank, super modern and efficient, in fact much better than BOC. And look what happened to it.

The final blow on the economy was in fact done when Anastasiades accepted the haircut on Laki’s deposits and it’s closing down (via blackmail from both the ECB and the IMF). Laiki could have survived, just like BOC did, who in just 3 years paid back all it’s ELA, but that’s a different story.

The 2013 haircut, basically killed all our economy, resulted to about 75% of the business going down to nearly zero, unemployment rising to record high, and even those who kept their jobs getting paid below the poverty level. As if this was not enough, the ECB suddenly realized that the loans were not performing any more! Wow what an unexpected surprise!

The NPLs at the Coop suddenly appeared to be 90%. At BOC about 70%. Hellenic Bank was the only Bank that was not exposed to the Greek bonds and therefore lost nothing from that. Yet even she suddenly appeared with 70%.

The question after that was what to do with these NPLs?
Let the Banks (all banks) go bankrupt?
Throw half the population out in the streets taking their homes? Who would buy all those properties and at what price? Should the Banks became real estate agents?
Save the Banks or save the people? Banks without people=0. People without Banks=0.

They eventually decided to give it time. This is the only way, wait for the economy to recover, unemployment to go down, people to start gaining more money, so that they would pay back their loans.

In summary it’s not a simple situation as you think and there were many factors that caused it.
Corruption in the Banks (with the exception of Vgenopoulos ripping off Laiki) was NOT the main reason.
Imo the biggest mistake we ever did was joining the Eurozone giving those criminals the control of our Central Bank and the chance to do the biggest crime they could ever do to us by forcing us to steal people’s deposits, at the precise time that our economy was going down the first bubble we ever had. Of course the target was always the Russian depositors but that’s a different story….

That is standard everywhere. Non performing loans are loans that have missed 3 months or more in payments. That is when the Blank starts to get heavy. Unless of course you communicate with them and try to explain your hardship and come up with a compromise which they are willing to do. They will even help you restructure. A bank will never foreclose on you if you are cooperative and willing to maintain open lines of communication. When you avoid them is when they start getting ruthless.

Now, if people are borrowing from loan sharks, again, it goes to show how stupid you are if that is a widespread practice. You might as well shoot yourself in the head.

You had an unsustainable economy on false pretenses and largely due to foreign capital which may have contributed to your downfall too. I don't know if that is really the case, I am just putting it out there.

During the time the CySex index went down from 72 then 100 in 2004 and then down to 12, the ASX went from 2500 to 6000 points. It more than doubled. Even through the 2008 crisis it still managed to reach 6600 only a month ago.

Well, Central banks will put all licensed Banks through stress tests to work out how healthy they are. They are the regulator and the body that sets the monetary policy of the entire country after all and control interest rates, so they need to know when to haul the Banks right Back in so they don't get carried away like they did in Cyprus. I'm not sure if the Banks did get carried away or there were other factors to play like massive Banking liabilities due to all the foreign Capital in Cyprus. The point is, your Government never really investigated anything or try to find out who to hold to account. Maybe they are hiding things themselves.

I know what a non performing loan is. And if there are more than 3 months of non payment, then they are indeed non performing. Why were 98% of loans non performing in Cyprus and only 1% elsewhere?

What went wrong Pyro? Why were Your Banks either so stupid or your Government so incompetent? Or both?

Why does this kind of shit always happen in Cyprus - first the CySec crash and then the Banking collapse. You are all so special? There has never been a total stock markets crash so large anywhere in the world (92% collapse) - neither total failure of 100%. There have been stock market crashes, and corrections but never anything like that.

And let's be factual here. The IMF and ECB saved your arses. It would have been a lot more worse if they didn't approve the tranche of bailout loans for the RoC and Cypriot Banks. You guys would have been in total depression and eating cat food.

And of course they are loans. You got to pay them back, both the IMF and ECB. They only gave you more favorable terms to get you out of the shit.

You guys (Banks and Government) did it all yourselves.

yeh what should have been done, is the Banks should have been allowed to foreclose a long time ago when non-performing loans were only 5%. Or make the Banks tighten their lending procedures. I am not sure which applies because your Government never looked into it with an inquiry for the people that would have occurred elsewhere.

What you don't do is rob savers who worked their whole life in a foreign country and ruin their plans of retirement in their own homeland.

The Government must have known this was happening a long time ago. Why didn't they act?

[Paphitis]

And fuck yeh! better to have 20,000 people on the street (and they wouldn't be on the street anyway), than to wipe out the savings of entire families that worked hard to save what they had and suddenly vanished into thin air. That money is sacred.

I don't care so much about the Russians or rich people worth a lot of money, just the average John that lost most of their savings.

Most of the Russian money is proably illegal dirty money anyway, but the savings of Cypriot families was money they toiled and sweated for.