CYPRUS’ construction sector has the lion’s share of business loans despite having the biggest problems with their ability to repay according to the “Household and Non-Financial Corporations Indebtedness Report” published by the Central Bank earlier this week.
The report presents a concise analysis of the level of indebtedness and the financial position of the main borrowers of the Cyprus banking system – the domestic household and non-financial corporations sectors.
The report reveals that loans to the construction sector are most problematic having the highest non-performing loans (NPLs) as a percentage of total outstanding loans.
At the end of December 2015 NPLs in the construction sector stood at 80.8 percent and although this has fallen from the 83.7 percent at the end of September 2015, the Central Bank considers that “the banks are highly exposed to the construction sector”.
Is it beyond the wit of the so called bankers to do due diligence on any one borrowing money, or does that only happen in the real world?
So why isn’t ‘sale of assets’ of these NPLs going full-steam-ahead?
@ Sky: Very good summary!
In 2006, I’m a developer but I don’t have any money.
I call my cousin banker who lends me money without genuine collateral (as I’m “pretty” sure to get the money back).
I build houses, sell them, give the money back to my cousin banker and pocket the benefits. My cousin is happy, me too.
In 2010, I ask more money to my cousin, sell more houses, give the money back, pocket even more benefits. My cousin is happier, me too.
In 2014, I try the scheme again but can’t sell the houses because I’ve built too many of them, and there is just not enough clients to buy them… My cousin is asking what the hell is going on, me too…
In 2018, my cousin banker is bankrupt, I’ve left the country, and some govt agency is trying to sell my houses which are worth peanuts thanks to the law of supply and demand, the shoddy build and few years of non maintenance…My cousin wants to shoot me.