New York City-based Apollo Global Management is in line to buy some 3 billion euros ($3.47 billion) in bad loans from the Bank of Cyprus, more than five years after an economic crisis triggered by the country’s banks weighed down by Greek companies not repaying loans and taking big losses in their holdings of Greek bonds that were devalued 74 percent.
Bank of Cyprus and Apollo are in talks in London to finalize details of the sale, the financial news agency Bloomberg said, citing sources it didn’t identify.
The government and officials from the European Union, which took part in a 2013 bailout of 10 billion euros ($11.56 billion) to prop up an economy on the edge of going under and save the banks, want the bad loans written down, including through selling them to other companies to hunt debtors, many of whom said they can’t repay because of austerity measures that came with the rescue packages.
President Nicos Anastasiades, reneging on campaign promises, authorized the confiscation of 47.5 percent of bank accounts over 100,000 euros ($115,650), hitting not only the wealthy but also the life savings of some people and small businesses.
He did not fulfill a promise to hold accountable any bank managers or other officials even though the Laiki Bank failed and many depositors were wiped out. Nor has he made good on a promise to help restore some of the losses to them while the country is recovering on the back of successive record tourism years.
Despite the comeback, Cypriot banks are still weighed down with bad loans they’re looking to sell off to take losses and get them off their books.
Bank of Cyprus reported some progress in its first-quarter earnings, saying it had reduced bad-loan exposure for a 12th consecutive quarter.