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LETTER TO THE EDITOR
Dear Sir
Taking for granted that Mr Sylikiotis and the government are genuinely trying to fix this huge problem (“Title deeds reform bills to generate €160 mln”, Financial Mirror, Nov. 25), and most people, myself included, want to see it all work out as the government intends, the difficulty lies in whether the proposals have covered all the key variables and whether all their assumptions are realistic. If not, then there is every reason to doubt that the current mess will be cleared up as quickly and efficiently as expected. Worse, the mess may simply be modified and made more complex.
For example, what will happen when the Cyprus banks start Non-Performing Loan recovery procedures against developers after 90 days (to correct previous failures in contravention of Basel II to chase delinquent mortgagees), as recently directed by the Central Bank? Many developers are barely keeping their heads above water as it is. To liquidate the recovered asset (often a buyer’s property that unbeknown to them has been mortgaged or re-mortgaged by the developer), the banks are likely to auction the property at a knock-down price, thus precipitating a sharp price adjustment in the market as the number of properties will be significant. There is nothing in the proposals saying that the banks cannot also demand that the unfortunate buyer cough up the developer’s outstanding debt as a means of forestalling the liquidation. Cases are already surfacing. The first rule of law and politics is to never say ‘Never’.
Presumably the government has a contingency plan to prop up the banks if they are simply unable to liquidate the recovered assets fast enough or to the required value and then get into a liquidity crisis of their own?
As a second example, we are advised that the government intends to increase staffing significantly in the Land Registry offices, etc. This will be necessary, given the sheer number of outstanding properties awaiting their deeds. But will even they be enough? And even if the numbers are sufficient, will they be of the right quality, trained skills and motivation and will they be under the disciplined management necessary to ensure that processing of applications and issue of deeds will be both accurate and prompt? We are being asked to believe that a radical change in the processing system is imminent and I am sure that is what Mr Sylikiotis wants and sincerely believes will happen. Unfortunately, on past performance there is a large amount of public doubt that it will be achieved. A sea-change in civil service culture and practice would be needed. Is this likely?
Other examples include grave concerns about the legal paraphernalia and I leave this to others who are qualified to comment, such as the Cyprus Bar Association and individuals such as Prof Andonis Vassiliades.
Most of us want Mr Sylikiotis and the government to succeed with solving the problem and to restore Cyprus’s standing and reputation on this matter. To achieve this outcome will require close attention to the many awkward questions and doubts that have been raised about the new proposals. I am keeping my fingers crossed, for all our sakes.
Kind regards
Alan Waring, Larnaca
Ed’s note: Dr Alan Waring is an international risk management consultant with extensive experience in Europe, Asia and the Middle East with industrial, commercial and governmental clients and regular contributor to the Financial Mirror through his Risk Watch column.
