The increase in the NPL ratio resulted from a reduction of overall outstanding loans by more than a billion euros, the central bank said in a statement on its website. Outstanding loans in the Cypriot banking system fell in August to €58.5 billion compared to €59.6 billion in July, according to the statement.

Phil Gerson, deputy director of the European department at the International Monetary Fund, said last Friday that while Cyprus was making progress in implementing its adjustment programme with international lenders, “there’s still a significant amount of work that needs to be done in Cyprus, including in particular dealing with the very high level of NPLs in the banking system”.

Later this month, the Supreme Court is expected to announce its ruling on the fate of four bills that accompanied the foreclosure legislation. The latter aims at making it easier for banks to liquidate collateralised real estate.

President Nicos Anastasiades deemed the four bills unconstitutional and referred them to the Supreme Court. The IMF, the European Central Bank and the European Commission, which supervise the Cyprus bailout programme, suspended the payment of the next tranche of bailout money following the foreclosure limbo.

Bank of Cyprus, the Central Cooperative Bank, Hellenic Bank and RCB Bank took part in the asset quality review by the ECB, which will determine which lenders will come under the ECB’s direct supervision in November.

The ECB stress tests comprise an analysis of each bank’s balance sheet as at the end of 2013, allocating risk-weighted value to its holdings and a subsequent estimation of recapitalisation needs under normal economic circumstances, considered as the baseline scenario, and under extreme economic conditions, the adverse scenario.

Source: Cyprus Mail