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CYPRUS: Hellenic Bank moots measures to deal with NPLs

27 August, 2014

Hellenic Bank, the island’s second largest lender recently rescued by private investors, said that the management of non-performing loans (NPLs) is a top priority and that it was handling the matter in a way that supports, rather than undermines, the economy.


The bank said in an announcement that it “evaluates borrowers on a case-by-case basis, seeking viable and functional solutions for every cooperating customer, based on his or her own particular circumstances.”
For retail customers who have lost their jobs or are dealing with health problems or a loss of income the bank is extending the time for loan repayment by up to 15 years, or up until the borrower’s 70th birthday, with a grace period of up to two years and a reduced interest rate.
Similar policies apply to small and medium enterprises (SMEs), depending on their business sector, Hellenic Bank said, adding that “of all the overdue loans, more than 50% of mortgages on primary residences and loans provided to SMEs have been restructured.”
This follows similar packages announced on Tuesday by Bank of Cyprus and the Cooperative Bank.
Almost identical to measures it announced a year ago, Bank of Cyprus said that unemployed borrowers with a home worth less than €250,000 can apply for a grace period of 15 months, while presenting proof of their financial status they can pay a symbolic monthly repayment of €10 and if they remain out of work, the agreement can be extended for a further 12 months to the end of 2017.
Those borrowers who saw a household income reduction of 25% and whose mortgaged home is valued at less than €250,000 can apply for a monthly repayment of €30 an after the grace period is over can pay only interest for a further 12 months.
Enterprises whose turnover has been reduced by 25% and whose mortgaged premises are valued at less than €250,000 can also apply for a 15-month grace period and repay €30 a month, with a further 12 months of just paying interest after the grace period ends.
The Cooperative Central Bank said that it, too, can offer favourable terms but only to those who have proven a income loss or reduction, are unemployed and have been prompt with older loan repayments.
For the Coops, the grace period has been set until January 2016, with the aim of concluding a viable repayment scheme and only after exhausting all other instruments. However, it said that the exception to the rule will be those who in the past have abused the system and avoided regular repayments.