Cyprus Lifestyle | Property News | Tourism & Hospitality
5 years May 7, 2018
Non-performing Loans Initiative Within the Cyprus Property Sector
Following comments from the troika on the particularly high levels of non-performing loans (NPLs) within the Cyprus property sector; the government is formulating suggestions to recover the liquidation and foreclosure legislation.
Speaking at the Economic Congress in Nicosia, the Cyprus Finance Minister stated that depending on investor interest in the co-op bank there are plans to set up a loan management body within the government to take care of the islands non-performing loans, specifically in the housing sector. The terms will be set by the European supervisors.
He said other banks will also be able to transfer their loans to the NPL Real Estate Administrator and borrowers who meet certain income and property criteria will be given support. “In any event, it must be understood that no loan will be written off, as the administrator’s proceeds from the borrowers rather than taxpayers, and will consequently repay the debt the state has now assumed.”
The creditor also deposited €2.6B recently in a bid to boost confidence amid rumours that sparked a mass withdrawal on the lender. As collateral, it received the co-op’s NPLs, worth around €6.3B, which will most likely be moved to a separate entity, off the lender’s books. But to have a chance to make back the money it has poured into the co-op; Cyprus parliament must agree to amend the foreclosures and insolvency laws in order to make it easier for banks to move against borrowers who do not service their debts.
The current legislation makes it difficult for banks to recover their money in the Cyprus property sector, something repeatedly pointed out by the EU and the IMF.