Cyprus Borrowers Association Highlights Concerns Over Non-Performing Loans Resolution

The Cyprus Borrowers Association (Syprodat) has expressed concerns over the resolution of non-performing loans (NPLs) in Cyprus. Syprodat argued that protective measures for vulnerable individuals alone are insufficient to address the NPL issue, emphasizing that such measures have limited scope.

In response to an interview with President Nikos Christodoulides, during which he discussed the need to avoid measures that undermine the payment culture and hinder banks' efforts to reduce NPLs, Syprodat disagreed with the creation of a "Special Court" for expediting borrower-creditor disputes, deeming it unconstitutional. Instead, the association suggested the establishment of a Financial Ombudsman to help address these issues.

Syprodat emphasized the importance of constructive dialogue between the legislative and executive branches of Cyprus as the parliament begins its sessions. The association believes that the Central Bank of Cyprus' ongoing initiative, if implemented correctly, can strike the right balance for a permanent resolution of NPLs.

Syprodat commended government initiatives, such as the Estia and Ikia programs and the "Rent for Installment" scheme, as beneficial for vulnerable segments of the population.

Regarding foreclosures, Syprodat agreed with the president's stance on not undermining the culture of payments or discouraging borrowers from participating in debt restructuring. However, the association noted that the proposed law amendment, rejected by parliament due to a tie vote, did not weaken the existing foreclosure framework. It merely granted borrowers the right to seek judicial protection in cases of over-indebtedness or abusive clauses in loan agreements.

Syprodat clarified that banks could have avoided this legal process by removing over-indebtedness and abusive clauses from contracts. The association stressed that the current legal framework for foreclosures remains unaffected.

President Christodoulides emphasized the importance of avoiding measures that could weaken the foreclosure framework, maintain Cyprus' credibility, and facilitate debt restructuring in his interview. He also discussed the government's intention to submit a bill to parliament for regulating the place of adjudication for disputes between borrowers and creditors related to credit facilities secured by primary residences up to €350,000. The government aims to work constructively with the legislative authority to establish an appropriate framework based on its proposals.

By fLEXI tEAM