CYPRUS: MPs push foreclosures debate to Friday

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Cyprus MPs have postponed to Friday the debate over a package of measures introducing changes to the foreclosure law which had been vetoed by President Nicos Anastasiades.


The issue was supposed to be discussed on Monday at the House Finance Committee and then put before the plenary, but deputies chose to defer a decision, to allow for a compromise deal to be put forward.

The legislation in question issued a temporary postponement of foreclosure procedures relating to primary homes that could be eligible for inclusion in the Estia scheme for distressed homeowners with a toxic mortgage, while also giving defaulted borrowers legal tools to halt a repossession of their properties. The Estia scheme is expected to come into force in October.

The postponement was requested by the chairman of House Finance Committee, DIKO MP Angelos Votsis, while the party’s president Nicolas Papadopoulos committed to presenting a proposal which will see the Financial Ombudsman referee cases in which borrowers and banks are unable to reach mutual understanding.

Speaking at the meeting, Finance Minister Harris Georgiades said that adopting the legislation in question would only result in great delays with strategic defaulters having the tools to put off complying with their obligations and keeping their mortgaged property.

He said that the proposed legislation has nothing to do with the Estia scheme and will only make foreclosure procedures for all property types lengthier.

Also speaking at the House, Central Bank governor Constantinos Herodotou said that the Single Supervisory Mechanism of the EU which is following the developments has issued a warning that developments may have a negative impact on the banks’ balance sheets, as they may find themselves in need to raise provisions.

The CB governor also reminded MPs that despite progress regarding the country’s banking system’s NPL exposure, Cyprus still has an non-performing loans ratio of 32%, while the EU average is 3.5% and the allowed ratio is 10%.

“With the proposed amendments, we will only be giving strategic defaulters more excuses to hide behind tegulations,” commented Herodotou.

Meanwhile, Cyprus’ two biggest banks have paid the price for the changes introduced by the House, as they lost a combined EUR 64 mln in market capitalisation as their shares took a plunge after the announcement of the changes on 12 July.

Bank of Cyprus has lost some EUR 43 mln in its market cap, while Hellenic lost 21 mln.

In the middle of last week the two banks appeared to be losing EUR 100 mln, but losses were halted in the wake of the government’s intention or referring the legislation back to the House.