Bank of Cyprus landed with 1.5 bln euros of property in bad loan battle
An asset swap for debt program run by Bank of Cyprus has helped the lender reduce bad loans but left it with real estate assets in excess of 1.5 billion euros.
Customers unable to service their loans at the bank can hand over property as a means of paying off debt, helping them avoid insolvency in a law that was introduced on the island state two years ago.
This is providing Bank of Cyprus with a tool to reduce bad loans and improve the health of its balance sheets but has landed it with assets it is struggling to sell.
The total value of real estate its holds, located in Cyprus, Greece and Romania, fell to 1.552 billion euros, from 1.641 billion euros at the end of last year, according to first quarter data provided by the lender.
But a closer look at the figures shows that it has started selling commercial assets in high demand - hotels and offices - with other real estate assets pushed to the back burner.
The value of hotels it owns fell to 57 million euros from 78 million euros at the end of 2017 while offices were reduced to 279 million euros from 336 million euros.
The largest chunk of property it owns - land (fields and plots) - was just about unchanged at 841 million euros, the data showed.