Non-performing loans at 49 per cent

Stelios Orphanides
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37
Non-performing loans at 49 per cent

Cyprus Non-performing loans at 49 per centNON-PERFORMING loans (NPLs) in Cyprus’s banking system continued to rise in October to 28.2 billion euros or almost 49 per cent of total loans the Central Bank of Cyprus said.

A month earlier, the NPL ratio was 48.5 per cent while in October last year it was 38.5 per cent the central bank said in a statement on its website. The respective amounts in all banks and cooperatives operating in Cyprus were 28.1 billion euros and 24.6 billion euros.

In October, banks saw the percentage of unserviced debts extended to companies at 50.7 per cent and that to individuals at 51.4 per cent, the statement said. The respective amounts were 15.8 billion euros and 12.4 billion euros.

Three quarters of loans to construction companies are non-performing

Three out of four outstanding loans extended to construction companies or 5.7 billion euros were in October non-performing and making out more than one third of company NPLs, the central bank said. NPLs to retail and whole sale companies as well to real estate companies which together made out less than one third of overall unserviced loans, stood at 2.4 billion euros and 2.3 billion euros with a non-performing ratio of 46.6 per cent and 56.4 per cent respectively, the central bank said.

45% of loans to individuals for buying/building property are non-performing

Nearly 45 per cent of loans extended to individuals by banks and cooperatives for the construction or purchase of immovable properties was non-performing in October and stood at almost 6.5 billion euros or more than half of overall non-performing credit to individuals, the central bank said. The non-performing ratio in the case of consumer loans was 61.3 per cent and with 4.4 billion euros made out more than one third of the overall non-performing debt of individuals.

Further reading

Non-performing loans October 2014 (Cyprus Central Bank)

Protection for crisis-stricken homeowners

George Psyllides
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21
Protection for crisis-stricken homeowners

Protection for crisis-stricken homeownersTHE FOURTH bill that forms the so-called insolvency framework affords protection to crisis-stricken homeowners whose homes are worth up to €250,000 and the amount they borrowed must not exceed €300,000.

The bill affords protection from foreclosure to individuals who meet certain criteria.

To be eligible, a borrower must prove they lost at least 25 per cent of their income because of the economic crisis no earlier than two years before filing an application for a personal repayment scheme.

The total of their loans must not exceed €300,000 and their primary residence must have a market value of up to €250,000.

The bill includes strict criteria that define who is exempted from repaying a debt as part of the scheme.

According to the bill, a debtor will not be exempted unless, among others, they have up to €5,000 in debt, net disposable monthly income of €100 or less, and €400 worth of assets.

The bill has been handed over to political parties for their views.

It is the fourth of five bills that constitute the insolvency framework, legislation that among others, aims to afford protection to vulnerable groups.

Two have already been submitted to parliament and another one, approved by the cabinet on Tuesday, is on its way.

The insolvency framework was meant to come into force at the beginning of the New Year to coincide with the enforcement of the foreclosures law.

The delay provided opposition parties with the opportunity to suspend the law in what observers described as a populist stunt that ultimately hurt Cyprus’ credibility.

Despite government pleas, they suspended the law until the end of January, claiming they did it to protect vulnerable groups.

Parties said it was the government’s fault for delaying the preparation of the insolvency framework.

The vote to suspend came a couple of days after lenders released some €350 million as part of the island’s bailout.

That money had been withheld in September after opposition parties pulled an equally unnecessary stunt, passing laws that limited the scope of the foreclosures legislation.

The president referred the laws to the Supreme Court, which ruled them unconstitutional, opening the way for disbursement of the tranche.

But an additional €85 million has been withheld by the International Monetary Fund following the suspension last Thursday.

Anastasiades said on Tuesday that he planned to refer the suspension to the Supreme Court.

Who are MPs trying to protect?

Nigel Howarth
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15

Who are MPs trying to protect?THE GOVERNMENT is considering how to best deal with the aftermath of the decision by Parliament to delay the implementation of the foreclosures law until the end of January.

Government spokesman Nikos Christodoulides said the Troika of international lenders may postpone its arrival in Cyprus to review progress on the implementation of the bailout adjustment programme.

The Eurogroup has expressed its displeasure at the delay in implementing the law, saying that repossessions are necessary to enable banks to deal with non-performing loans.

In August chairman of the Bank Association Giorgos Georgiou said that “Commercial banks have no intention to foreclose on the homes of vulnerable groups. All countries in the world must have effective legislation.”

“There are many borrowers who strategically do not pay,” he said. “The legislation will force them to come and pay.”

At the same time, Christis Hassapis the (then) Chairman of the Bank of Cyprus said “BoC’s intention is to look at large borrowers first. Small borrowers have nothing to fear. We will start with the millionaires and work our way down.”

As it stood in September the Foreclosures Bill forbade foreclosing on a property that had been sold but which was burdened by a mortgage, providing that the purchaser had paid at least 80% of its purchase price.

When you consider that only three foreclosures have ever taken place in Cyprus and that the foreclosure law forbade the repossession of a property under certain circumstances and that the banks have assured President Anastasiades that they will not target vulnerable groups, you really have to wonder who opposition MPs are trying to protect.

It’s naïve to think politicians will get us out of this mess

Stelios Orphanides
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9
It’s naïve to think politicians will get us out of this mess

politicians voting in the Cyprus parliamentCYPRIOT politicians have apparently lost their moral compass – a large number of them at least. With their vote on Thursday, they proved they are not serving the national interest, even as they pay lip service to it.

Their decision to pass a law “in order to protect citizens from foreclosures” suspending another one they passed in September that was a precondition for Cyprus getting another tranche of bailout money, which it desperately needs – let’s not forget, the government has to find the funds to refinance more than 2 billion euros in maturing debt next year – was not a harmless bit of theatre for domestic consumption.

They should know – and in fact they do know better than any other citizen – that banks are far from ready to engage in “mass foreclosures” for several reasons. The relevant regulations are not ready yet, the banks still lack the administrative capacity to do so and the economy is still not strong enough, just to name a few.

But this is not the point. With their vote the parties damaged the state’s credibility and the country’s interests. The agreement between Cyprus and the international lenders is not an internal affair, some sort of agreement between the Cypriot government and parliament.

It is an agreement between the Cypriot government and European bodies and the IMF. This agreement allows Cyprus to receive funds provided by other euro area countries, including those with a much lower standard of living like Slovakia and Estonia, as well funds from non-EU countries with an even lower income per capita, to pay salaries and pensions.

The best way to thank a taxpayer in Asia, Africa or South America and elsewhere for contributing to Cyprus’ bailout would be for Cyprus to honour this agreement, stick to its terms and make sure it will it pay back.

Instead, some Cypriot politicians proved they will not hesitate to cheat in order “to send a message”.

What kind of message that was and to whom it was sent is irrelevant because the message the lenders received was that “an agreement with Cypriots is not worth the paper it is written on”.

Let’s us not forget. It was the same political parties, which in order to protect the interests of developers, ten years ago also turned down the settlement plan for the Cyprus problem they earlier accepted by engaging in the negotiation process. And it is the developers they want to help once more – developers who exploited the gaps in the legislation, irresponsible politicians knowingly maintained, in order to finance their business with depositors’ money they cannot or do not want to repay.

And one has to have a look to what is going on in Paphos in order to understand how developers and the construction sector have been calling the shots for years, if not decades.

As it was these dishonourable and dishonest politicians who put us in to this mess in the first place, it would be naïve to expect them to get us out of it. The reason is clear. If a country wants to be trustworthy and regarded as such, then its political leaders have to be honest and respect their state’s agreements with third parties.

Our top 10 stories from Cyprus in 2014

Nigel Howarth
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6
Our top 10 stories from Cyprus in 2014

TRADITION dictates that as we approach the end of a year that we publish a summary of the top 10 stories and articles that we have published over the past 12 months.

This is not a subjective list, but a digest of the stories that you, the readers, clicked on the most on the Cyprus Property News website. Here is the countdown of this year’s top 10 stories:

At number 10: Paying Immovable Property Tax 2014 – Information from a senior officer at the Tax Office in Nicosia advising those without Title Deeds of the information needed by the Tax Office to calculate their Immovable Property Tax liability.

At number 9: Cyprus economy & real estate forecast 2014-2015 – A forecast by Leaf Research into the island’s economy and its property market for the year ahead – and its prospects for the future.

At number 8: Cyprus Title Deeds bank extortion – Daniel Hannan MEP raised a question in the European Parliament asking if the Commission was aware that receivers acting for banks are currently threatening buyers with selling their homes unless the buyers pay off the developers’ defaulted mortgages, their taxes and other creditors.

At number 7: Refunding developers’ Immovable Property Tax – Advice on how to handle the more nefarious developers who were making unreasonable demands for Immovable Property Tax from their clients.

At number 6: Permission granted for Oroklini theme park – The Disneyland-style theme park was in the news again when it was reported that the Government had granted permission for the construction of touristic village and a five star hotel set in 500,000 square metres of land.

At number 5: Immovable Property Tax Announcement – An announcement from the newly formed Tax Office, which resulted from the merger of the Inland Revenue Department and the VAT Service, on the payment of Immovable Property Tax for 2014.

At number 4: Immovable Property Tax payment and collections – An update of the Immovable Property Tax revenue collected by the Tax Department, which noted that only those with modest properties have paid at the time.

At number 3: Nigel Howarth meets the Troika – A report on the meeting I had with nine delegates from the Troika of Cyprus’ international lenders in May where we discussed many of the problems faced by those who have bought property on the island and who have yet to secure its Title Deed.

At number 2: Cyprus Immovable Property Tax 2014 – A summary of the changes made to the Immovable Property Tax law, which included the need for those without Title Deeds to pay the Immovable Property Tax directly to the Tax Office.

At number 1: Cyprus property valuations now online – A guide to finding out the revised valuation of properties, which have been published on the Department of Lands & Surveys website and which will be used for taxation purposes in 2015 (assuming that all goes according to plan).

May I take this opportunity to wish you all a very Merry Christmas and
health, happiness and success in 2015.

??? ??????? ???? ???????????? ??? ??????????? ?? ???? ???? 2015.

IMF suspends Cyprus loan tranche

Editorial
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11
IMF suspends Cyprus loan tranche

IMF suspends Cyprus loan trancheTHE INTERNATIONAL Monetary Fund (IMF) on Thursday said it could no longer release funds to Cyprus under its bailout this week, after the euro zone government suspended a foreclosure law that was required under the loan program.

“Following today’s suspension of the existing legislation on foreclosure, critical requirements for the completion of the fifth program review are now no longer met,” the IMF said in a statement. Its board had been set to discuss Cyprus’ progress with the loan program on Friday and was likely to release the next instalment of aid.

Cyprus needed an international bailout of 10 billion euros ($12 billion) from the European Commission and the International Monetary Fund in early 2013, largely due to problems in its banking sector.

The euro zone released its latest tranche of bailout loans to Cyprus in November after Nicosia amended laws on foreclosures and on forced sales of mortgaged property in line with the conditions of the loan.

“We look forward to continued cooperation, and will agree with the authorities on next steps in the period ahead,” the IMF said in the statement.

– Reuters

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