12/09/2019

Progress report ofSEDIPES/KEDIPES up to 30/6/2019

Cyprus Asset Management Company (KEDIPES), 100% subsidiary of SEDIPES (ex-Cyprus Cooperative Bank) reports on the progress until 30/6/2019 regarding the management of the assets of the ex-Cyprus Cooperative Bank.

On 3/9/2018, the business transfer agreement between ex-Cyprus Cooperative Bank and Hellenic Bank Public Company Ltd was completed. On 25/1/2019 SEDIPES, which still has the ownership of the loans at this stage, was licensed as a credit acquiring company, and all smooth implementation of restructuring/ recovery solutions recommenced.

The residual entity (SEDIPES/KEDIPES) focuses exclusively on the management of the assets and does not carry out any other economic activity.

A. Cash Inflows

Cash inflows are generated mainly from the management of the two main asset classes, namely loans and property.

Total cash generated from the management of the assets until 30/6/2019 reached to €288,3m.1, with cash generated in the last quarter reaching €108,1m., increased by 36,8% compared to the previous quarter.

€mln. Q22019

Q1 2019 +/-

Total1/9/2018 -30/6/2019

Cash inflows from loans 70,5 49,3 43,0% 173,1

Cash inflows from property management 33,2 26,0 27,7% 97,9

Other inflows 4,4 3,7 18,9% 17,3

Total cash inflows 108,1 79,0 36,8% 288,3

1 Cash inflows and outflows are based on non-audited management information and an approximate allocation of cash movements. Assets as at 30/6/2019 are subject to revaluations.

A1. Loans management

Cash inflows from the management of loans are analysed as follows:

Per performance category

€mln. Q22019

Q1 2019 +/-

Total 1/9/2018 - 30/6/2019

Inflows from Non-performing loans 57,6 37,2 54,8% 122,8

Inflows from Performing loans 12,9 12,1 6,6% 50,3

Total 70,5 49,3 43,0% 173,1

Per customer type

€mln. Q22019

Q1 2019

+/- Total

1/9/2018 - 30/6/2019

Private individuals 52,5 34,1 54,0% 118,5

Companies 15,3 9,5 61,1% 29,6

Municipalities and Government Organisations

2,7

5,7 -52,6% 25,0

Total 70,5 49,3 43,0% 173,1

Cash inflows in Q2 2019 from non-performing loans have increased significantly compared to previous reported periods, as this is the first fully functioning period following the licensing of SEDIPES, as a credit acquiring company. Therefore, all restructuring or recovery solutions were implemented without obstacles, a factor which contributed to the:

Increase in total loan receivables to €70,5m compared to €49,3m in the previous quarter, recording a 43% increase, and

Increase in receipts from non-performing loans to €52,5m from €34,1m in the previous quarter, recording a 54,8% increase.

Due to the increase collections from non-performing loans the relative contribution of performing loans, mainly by Municipalities and Government Organizations, has been reduced. These loans also tend to have concent as these loans also have a mostly due at the end of the calendar year.

Loans in arrears over 90 days are managed through Altamira Asset Management Cyprus Ltd (ALTAMIRA). The cumulative restructuring or recovery solutions implemented through ALTAMIRA until 30/6/2019 were €541.6m.

Q2 2019 solutions reached €376,9m., significantly increased by 162% compared to €142,0m. solutions the previous quarter, as the licensing of SEDIPES allowed in this quarter to implement solutions agreed in the current as well as previous periods.

The agreed and implemented solutions (in nominal loan balances) are analyzed by type of solution as follows:

€mln. Q2 2019

Q12019 +/-

Total1/9/2018 -30/6/2019

Restructuring 164,5 33,8 387% 198,3

Debt-to-Asset swap 120,9 51,3 136% 173,7

Full settlements 56,0 34,9 61% 103,2

Re-performing loans 23,2 17,7 31% 49,2

Cash collections on overdue loans 12,3 7,0 76% 29,3

Total 376,9 142,0 161% 553,7

Loan balances at the end of the period are as follows:

Per performance category

€mln. Balance as at 30/6/2019

Balance as at 31/3/2019

Balance as at 31/12/2018

Non-performing loans 6.704 93% 6.871 93% 6.887 93%Performing loans 531 7% 523 7% 515 7%

Total 7.235 100% 7.394 100% 7.402 100%

Per customer type

€mln. Balance as at 30/6/2019

Balance as at 31/3/2019

Balance as at 31/12/2018

Private individuals 5.879 81% 5.995 81% 5.957 80%Companies 1.093 15% 1.135 15% 1.176 16%Municipalities and Government Organisations

263 4% 264 4% 269 4%

Total 7.235 100% 7.394 100% 7.402 100%

A2 Property management

Cash inflows from property management derive mainly from real estate sales and to a small extent from rentals.

€mln. Q2 2019

Q12019 +/-

Total1/9/2018 -30/6/2019

Inflows from property sales 32,2 24,9 29% 94,4

Inflows from rentals 1,0 1,1 -9% 3,5

Total 33,2 26,0 28% 97,9

Real estate sales through ALTAMIRA as at 30/6/2019 reached €79,4m. including €15,5m assisted sales of mortgaged properties. Q2 sales totaled €29,8m. at around the same level as in the previous quarter. It is noted that there is no promotion for sale of properties for which there is a decision or interest to buy for use by government agencies or local authorities (as per relevant decisions of the Council of Ministers), thus adversely affecting sales:

SalesQ2

2019Q1

2019Total 1/9/2018 -

30/6/2019Q. €mln. % Q. €mln. % Q. €mln. %

Land 96 12,3 41 85 15,5 51 249 37,0 47

Commercial properties 26 8,4 28 32 10,1 34 81 21,6 27

Residential properties 76 9,1 31 54 4,5 15 195 20,8 26

Total 198 29,8 100 171 30,1 100 525 79,4 100

Cash collected from property sales is higher than sales during the period due to settlement of property sale receivables regarding property transactions carried out before 1/9/2018.

A.3 Other receipts and flows

Other receipts and inflows relate mainly to revenues from services provided to Hellenic Bank under the Transitional Service Agreement (total of € 7,0m, of which €2,9m. in Q2 2019) and ALTAMIRA, also under a reverse Service Level Agreement (total €4,7m, of which € 1,5m in Q2 2019). Revenues from services to Hellenic Bank are non-recurring as the related agreement expires at the end of November 2019.

B. Cash Outflows

Total cash outflows until 30/6/2019 amounted to €198,5m..

Cash outflows in Q2 2019 amounted to €69,8m. compared to €38,6m. in the previous quarter. The variation relates to the settlement of liabilities and specifically the payment of the second (out of three) instalment of the Voluntary Redundancy Scheme.

€mln. Q2 2019

Q1 2019 +/-

Total1/9/2018 -30/6/2019

Expenditure 27,5 28,3 -3% 89,9Servicer fees 11,1 10,8 3% 33,2Staff expenses 4,1 3,2 28% 1

5,0Other expenditures and flows 12,3 14,3 -14% 41,7Settlement of liabilities 42,3 10,3 311% 108,6Voluntary Redundancy Scheme 41,9 0,4 85,8

Agreement with Hellenic Bank 0,2 5,5 -96% 12,2

Other liabilities of ex-CCB 0,2 4,4 -95% 10,6Total cash outflows 69,8 38,6 81% 198,5

The expenditure paid relates to:

the cost of the Servicer (ALTAMIRA) for the management of loans in arrears over 90 days past due as well as the sale / rental of properties. Servicer remuneration consists of a fixed remuneration and variable remuneration based on the restructuring or recovery solutions implemented as well as property sales and rental income.

the cost of staff employed by KEDIPES. The headcount of KEDIPES on 30/6/2019 was 339 staff, of which 43 returned from ALTAMIRA, while another 199 staff of ALTAMIRA is staff of the former Cooperative Bank of Cyprus. In addition, on 30/6/2019, 37 staff under the voluntary redundancy scheme are employed on a temporary basis to ensure the smooth transition of operations and support to Hellenic Bank, which will be provided based on a transitional servicing agreement until November 2019. The number of these people decreases each month as needed, and all will be released by the end of November. The increase in staff costs in Q2 2019 from €3,2m. to €4,1m. is a non-recurring outflow associated with the transfer of employer contributions after 3/9/2018 to the new staff provident funds.

the other costs and flows which relate to,

o regular operating costs (such as premises costs, IT systems, networks and communication, document management, professional and supervisory costs, etc.). KEDIPES accounting operating expenses amount to €22,8.m of which €6,5m. in Q2 2019.

Part of the operating expenses arises from the support of Hellenic Bank and is subsequently invoiced to Hellenic Bank under the relevant agreement,

o expenses related to the management and recovery of assets (such as legal costs, valuation expenses, settlement of tax memos during property onboarding, etc.)

o capital expenditure and other flows.

The liabilities undertaken by KEDIPES relate to the settlement of the compensation of the retired staff under the Voluntary Redundancy Scheme, totaling €133mln, the obligations arising from the business transfer agreement with Hellenic Bank including the Asset Protection Scheme, which was initially estimated at €155m, and all other obligations of the ex-Cyprus Cooperative Bank.

With respect to the Voluntary Redundancy Scheme, the compensation is payable in three installments. The first instalment was paιd in September 2018, the second instalment at the beginning of June 2019 and the third instalment is payable in December 2019.

In addition, the Asset Protection Scheme with Hellenic Bank will become effective in the third quarter of 2019 with the first claim with a reference date of June 30, 2019 to be received in October.

C. Cash position and assets under management

Based on the cash inflows and cash outflows as explained above, the cash position on 30/6/2019 was €170,6m, showing an increase of €38,2m from the balance as at 31/3/2019.

€mln. Q22019

Q12019

Total1/9/2018 -30/6/2019

Cash balance beginning of period 132,4 91,9 80,8

Surplus of cash inflows over expenditure expenses

80,6 50,7 198,4

Cash inflows from the management of assets 108,1 79,0 288,3

Expenditure -27,5 -28,3 -89,9Settlement of liabilities -42,3 -10,3 -108,6Cash balance closing of period 170,6 132,4 170,6

The surplus funds from the management of the assets will be gradually repaying the state aid starting the end of 2019. In addition, part of the state aid will be repaid in the form of property and other assets transfer.

The assets under management as at 30/6/2019 comprise of:

€mln. Balance as at 30/6/2019

Balance as at 31/3/2019

Balance as at 31/12/2018

Loans (nominal value) 7.235 89% 7.394 90% 7.402 90%

Immovable Property 621 8% 590 7% 658 8%Cash and balances with banks 171 2% 132 2% 92 1%

Participations in commercial cooperative companies and other assets

91 1% 90 1% 100 1%

Σύνολο 8.118 100% 8.206 100% 8.252 100%

KEDIPES will be providing quarterly progress updates regarding the management of the assets of ex-Cyprus Cooperative Bank.