Moody's on the progress under BOCs' restructuring.
Moody's notes in a credit outlook bulletin that the Bank of Cyprus is making appropriate progress in implementing its restructuring plan.
Moody's points out that the BoC repaying an additional €500 million of Emergency Liquidity Assistance during July and August, reducing its stock to €5.4 billion or 23% of assets, will lower the bank's funding expense and strengthen confidence in its ability to continue implementing the restructuring plan it agreed on with the European Union in 2013.
According to Moody's, since April 2013, when ELA funding peaked at €11.4 billion, the BoC has repaid around €6 billion. Moody's states that during the second quarter of this year, BoC's deposits in Cyprus stabilized at €11.6 billion, and as assets declined by €1.4 billion, deposits increased to 53.7% of assets from 51% in March 2015.
Furthermore, the agency refers to notice letters sent by the bank to around 25 defaulted corporate borrowers with €84.9 million of total loans outstanding regarding foreclosure proceedings on their real estate collateral.
Conversely, Moody's also mentions that although the ELA repayment is ahead of plan, we nevertheless expect BoC's balance sheet repair process to be lengthy given its high stock of NPLs, and we expect high provisions and write-offs to burden the bank for years.
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