Cyprus’ non-performing loans have climbed beyond levels seen at the height of the 2013 financial crisis, intensifying political pressure for sweeping foreclosure reform ahead of May’s parliamentary elections.
Confidential data from the Central Bank of Cyprus reveals that total non-performing loans now stand at more than €25 billion, well above the roughly €15 billion peak recorded in 2013. The figures underscore mounting stress within the property-linked credit system, even as commercial banks have significantly reduced their direct exposure.
Vulture funds have acquired 141,478 Cypriot loans with a face value of €3.2 billion at a 20% discount. While they have since collected €5.7 billion including €3.6 billion in cash repayments, €619 million from property recoveries and €1.5 billion via debt-for-property swaps and the portfolios they hold have ballooned to €18.5 billion as interest and compound interest continue to accrue.
The government is increasingly concerned about the issue, particularly the continued application of compound interest on distressed debt.
State-owned asset manager KEDIPES, which absorbed 77,561 former co-operative bank loans worth €7.5 billion, reported an outstanding balance of €5.7 billion in June 2025, of which €5 billion remains non-performing.
Within the core banking system, the picture appears more stable. As of last June, 24,736 NPLs worth €1.45 billion remained on bank balance sheets, down €86 million since December 2024. Politically, this matters: with banks having offloaded much of their bad debt, parties argue that reforming foreclosure rules now poses less systemic risk than it would have in 2013.
One of the 30 legislative proposals set to be discussed on 9 March is thought to be from Marios Garoyian of DEPA. He proposes suspending foreclosures on primary residences valued up to €350,000 until year-end, alongside binding rulings from the Financial Commissioner and tighter caps on accrued interest.
With non-performing loans exceeding the crisis-era highs, Cyprus’ property and lending framework faces its most consequential legislative test in more than a decade.
