Source: cyprus-mail.com
Cyprus’ state-owned asset management company Kedipes expects its repayments to the government to exceed €2 billion during the final quarter of 2026, as it moves away from loan portfolio sales and places greater emphasis on recoveries and early loan repayments.
Kedipes chairman Lambros Papadopoulos said a further €120m in cash would be returned to the state before the end of the year.
Total state aid repayments had reached €1.93bn by September 4, he added. This included €1.76bn in cash, the transfer of 247 properties worth €48m, expenditure of €110m under the mortgage-to-rent scheme and a further €13m through Estia and other arrangements.
During the first half of 2026, Kedipes generated regular cash inflows of €162.9m, up 0.9 per cent from €161.5m a year earlier, despite the continued reduction of its portfolio.
According to Papadopoulos, inflows were supported by early repayment schemes covering performing and non-performing loans. However, progress with non-consensual recoveries fell short of the company’s business plan.
Since Kedipes began operating on September 1, 2018, cumulative cash inflows have reached €3.1bn. Of this amount, €2.95bn came from the management of loans and properties, equivalent to 36.7 per cent of the portfolio’s initial nominal value of €8.05bn.
At the same time, operating and asset management expenses fell by 11.6 per cent to €43m during the first six months of the year, from €48.6m in the same period of 2025.
Net cash flow after expenses and other obligations stood at €74.4m, down 31.2 per cent from €108.2m a year earlier. Since 2018, cumulative net cash flow has reached €1.86bn.
Restructuring and recovery solutions completed through servicing company doValue amounted to €304m during the period, compared with €321m in the first half of 2025.
Since Kedipes began operations, total solutions have reached €5.6bn, representing 76 per cent of the initial loan balance of €7.37bn.
Meanwhile, the nominal value of loans held by the company fell to €4.85bn at the end of June, from €4.89bn at the end of 2025 and €5.22bn a year earlier.
Total assets stood at €5.48bn in nominal terms, including €179m in cash and liquid assets, property worth €410m and €4.26bn in performing loans.
Papadopoulos said “the overall reduction in assets since September 2018 had reached 33.6 per cent, rising to 51.5 per cent when contractual loan interest was excluded.”
Kedipes also completed the technological upgrade of its central computer system and regional systems in March 2026, a move Papadopoulos said “had improved its operational efficiency.”
However, the company has now revised its business plan after encountering difficulties in pursuing non-consensual solutions and selling loan portfolios.
It has also taken into account higher inflows from its early repayment schemes, its agreements with Eurobank and recent legislative changes that have directly and indirectly affected the pace at which its targets can be met.
Although the revised plan retains 2030 as its main completion horizon, Kedipes will no longer actively pursue loan portfolio sales under its base scenario.
Papadopoulos explained that “such transactions could also increase state expenditure because of the way Kedipes has been classified for statistical purposes since 2018.”
Instead, the company is targeting repayment of 90 per cent of the state aid, equivalent to €3.2bn, by the end of 2030.
It is expected to retain a portfolio with a nominal value of €2.4bn at that point, including €500m in performing loans and properties outside the mortgage-to-rent scheme.
The change follows the termination of the Ledra 2 portfolio sale process. Papadopoulos said “prolonged discussions with interested investors had failed to produce an outcome that met Kedipes’ objectives, leaving recoveries through the company’s own operations as its main strategy.”
Elsewhere, Kedipes has completed the first transfer of former Cyprus cooperative bank properties to the state, handing over 247 properties worth €48m following a cabinet decision.
Work is continuing on a further 172 properties with an estimated value of €81m. Nevertheless, Papadopoulos said the final number transferred was likely to be lower because of technical issues and the changing requirements of government departments and local authorities.
Interest in the mortgage-to-rent scheme has also exceeded initial expectations.
Between May 4 and July 31, 929 new applications were submitted, taking the total since the scheme was launched in 2023 to 4,269.
The deadline was subsequently extended until September 30 following a rush of applications towards the end of July. The latest figures show that 972 applications have now been lodged during the reopened application period, bringing the overall total to 4,312.
Of the 2,574 applications that have not been rejected or withdrawn, 1,268 have been approved, while Kedipes has already acquired 896 homes at a cost of €110m.
The initial estimate of 800 approvals has therefore been exceeded, with the target now revised to around 2,000 approvals.
Papadopoulos warned that “the higher participation would have a considerable negative effect on public finances.” Kedipes is maintaining a €60m cash reserve to finance the scheme.
In addition, the company is maintaining €60m in cash to complete the repurchase of a non-performing loan portfolio previously covered by the Asset Protection Scheme.
The scheme, which was provided to the former Hellenic Bank, covered 90 per cent of credit losses on loans with an initial contractual value of €2.61bn and a reference value of €2.27bn.
Although it had originally been due to run until 2030, it was terminated with a reference date of September 30, 2024. At that point, the covered assets had a contractual value of €1.21bn and a reference value of €920m.
Total claim payments made to the former Hellenic Bank under the scheme reached €102.5m, while payments from the bank to the Republic of Cyprus, as guarantor of the scheme, amounted to €46.1m.
As part of the termination agreement, Kedipes paid €17.5m in compensation to Eurobank during the first half of 2026 for the loss of protection covering performing loans.
Kedipes also repurchased the portfolio of non-performing loans previously covered by the scheme. Cumulative payments for the repurchase had reached €47.2m by June 30, against a final agreed price of €107m.
Net inflows from managing the repurchased portfolio reached €19.6m between February 1 and June 30, providing a €7m benefit to Kedipes’ first-half results.
Meanwhile, a further €50m cash repayment was made to the state on June 30, taking cash repayments during the first half to €80m and the cumulative cash total since September 2018 to €1.76bn.
Papadopoulos also said that “Kedipes’ early repayment scheme for restructured performing loans, launched in July 2025, would continue until the end of 2026 after attracting stronger interest than initially expected.”
Borrowers participating in the scheme receive a substantial discount on their remaining balance if they repay their restructured and performing debts in full, helping Kedipes accelerate the reduction of its loan portfolio.
Papadopoulos added that “Kedipes remained committed to managing its assets responsibly and maximising recoveries as quickly as possible, in line with its commitments to the Directorate-General for Competition of the European Commission.