The law on foreclosures has been suspended a number of times while MPs thrash out a package of insolvency measures.
The five bills that make up the insolvency framework will not be heading to the plenum on Thursday as more time is needed to process them but an effort will be made to get them there before Easter, lawmakers said on Tuesday.
Bank of Cyprus CEO John Hourican told the FT: “Without the legislation in place we feel like we’re wielding a marshmallow hammer when we deal with debtors.”
The paper said the lender has 500 staff working in its restructuring and recoveries division to deal with stressed or delinquent loans worth €11.5 billion — “equivalent to about two-thirds of the island’s gross domestic product”.
It quoted supporters of the law as saying it was vital to deal with the situation if the island’s economy is to return to meaningful growth.
Without it, bankers warned, it would take up to 10 years to deal with bad loans, leaving Cypriots starved of credit and investment, the FT said.
“The problem facing Cyprus is immense. More than half of loans to businesses and households on the island are non-performing. The same figure for Greece is, at 34% in September 2014, substantially lower despite higher unemployment and a more drastic economic contraction,” the report said.
It said Hourican denied a charge that banks would use the legislation to chase vulnerable Cypriots out of their homes.
“It is absolutely not our intention to undertake mass foreclosures on normal people’s homes,” he said. “This would not be in the bank’s or society’s interests.”
Hourican added that the links between business, politics and banking in Cyprus, which has a population of just over 800,000, “needed to be broken”.
The FT also quoted officials saying that one consequence of the haircut was that some Cypriots were unwilling to repay their loans, regardless of whether they could afford to. “The question hanging over Cyprus is which non-performing loans reflect people who are unable (to) pay and which reflect strategic defaulters,” Marios Clerides, general manager of the Cooperative Central Bank told the FT. “There are borrowers who are waiting to see if the legislation will be implemented before deciding whether or not to pay, or restructure, their loans.”
Source: Cyprus Mail
