Foreclosures bill passed

Constantinos Psillides
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15
Foreclosures bill passed

Cyprus ParliamentTHE hotly-debated foreclosures bill was passed by the House of Representatives on Saturday, following yet another marathon extraordinary session, but putting an end to three weeks of bickering and intense deliberations between parliamentary parties and the government.

Along with the controversial bill, the parliament passed a number of amendments and additional bills, said to aim for the protection of borrowers against foreclosure.

The bill was passed by 47 votes – those of AKEL, DISY and DIKO.

EDEK, the Green Party and independent Zacharias Koulias – a total of seven – voted against it. EVROKO’s leader Demetris Syllouris abstained.

The plenum session was originally due to start at 9.30am but was then pushed 10.30am, 11.30am and then to 12.30pm. It finally started at 2pm.

Voting on the bills came close to being postponed until Monday, when at around 4pm, Citizens’ Alliance MP Nicos Koutsou decided that the prolonged session was making a mockery of the deputies and should be put off until then.

“We will be ridiculed if we postpone voting for Monday,” responded AKEL MP Nicos Katsourides, asking that Koutsou’s proposal be rejected. Voting finally commenced at 4.30pm.

Following a suggestion by the majority, the plenum approved a resolution making the implementation of the foreclosure bill conditional on implementation of the insolvency framework.

The resolution requires the government to bring before the plenum legislation regarding insolvency no later than January 1, 2015, when the foreclosures bill will be put in effect.

The insolvency framework, a set of bills complementary to the foreclosures legislation, will be designed to balance borrowers’ rights with their obligations to lenders, offering them protection from foreclosure under certain circumstances.

According to Cyprus’ economic adjustment programme, it is scheduled to be put to a vote by the House by the end of 2014.

Greens’ MP Giorgos Perdikis didn’t vote for the resolution, saying the insolvency legal framework was flawed, vague and that it would end up being used against the very people it claims to protect.

Passing the additional bills, along with the troika required foreclosures bill, is regarded as a face-saving manoeuvre for the MPs. The troika had already rejected these suggestions when put before them by the House, thus President Nicos Anastasiades will most likely send all the bills back to the House, with the exception of the foreclosures bill which was set as requirement by troika for Cyprus to receive the next bailout tranche. The bill was to be passed before next week’s Eurogroup meeting.

With that criterion fulfilled, Anastasiades is free to send the rest of the bills and amendments back to the House.

Then, the House majority refuses to budge, and the President refers the matter to the Supreme Court, meaning the parties’ bill has no effect until the court issues a ruling.

AKEL general-secretary Andros Kyprianou, in his speech before the House, inadvertently admitted to the face-saving stratagem, warning Anastasiades that his party would find other ways “to protect the people.”

“If president Anastasiades sends back these amendments, he will be siding with troika and put himself against the wishes of the people’s representatives,” said Kyprianou.

Linking the foreclosures bill with the insolvency framework – along with the additional bills and amendments provided DIKO and AKEL with enough political cover to side with DISY and secure the needed majority in the plenum for the foreclosures bill to pass.

DIKO, which was in the government coalition a year ago, has voted for almost every troika-related bill so far, including the equally hotly debated privatisation bill.

Nicolas Papadopoulos, the leader of DIKO, told the plenum that mass foreclosures were an unavoidable outcome, unless a way is found to stop it.

“We have to stop foreclosures. We have to protect people’s homes. But if we allow Cypriot businesses to fail, there will be no homes left to protect. By protecting homes and destroying businesses we achieve nothing,” he said.

The second bill to be passed eliminates abusive charges by banks and includes a ban on excessive loan restructuring fees and a cap on late-payment interest at 2 per cent.

A third bill regulates the sale of loan portfolios, which will be allowed only to legal persons licensed by the CBC and credit institutions or funds licensed to operate on the island.

The fourth bill expands borrowers’ right of legal assistance in court proceedings relating to foreclosures.

The fifth, and final, bill obliges the Central Bank of Cyprus to inform the House of developments in loan restructuring on a quarterly basis.

DISY leader Averof Neophytou – who acted as an intermediary during the parties’ negotiations with the government – blamed the Eurogroup and the previous administration in equal measure for the state of the economy.

“Cypriot MPs are forced to vote on the lesser evil,” said Neophytou, stressing that the foreclosures bill was a tool for the banks to go after the big borrowers and not the those who cannot make their payments due to the country’s financial state and the austerity measures.

“If the banks think they can cannibalise the public, then I will be on the side of all those that oppose them,” warned Neophytou.

Regarding the insolvency bill, Neophytou said that the government would keep its promise.

The next House session has been set for September 18.

No repossession of paid for properties

Nigel Howarth
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38
No repossession of paid for properties

PARLIAMENTARY parties are continuing their discussions on the controversial foreclosures bill in efforts to reach a consensus while disagreements between the parties and the troika of international lenders remain.

Yesterday’s session the House finance and interior committees, which lasted several hours, failed to reach an agreement – and further discussions are being held today.

Of the ten proposed amendments to the bill that the government has put to the Troika it’s reported that the Troika has agreed to six if certain provisions are met, and rejected the other four.

According to reports, the Troika rejected proposals to protect small business property and professional residences from repossession and also rejected a proposal to write-off any debt remaining once a property has been auctioned off. The Troika said that these issues will form part of the discussions relating to the insolvency framework to be put in place by 1st January 2015.

On a more positive note, the Troika is reported to have approved amendments to the bill enabling those facing repossession the right legal recourse, a condition that bank shareholders may not involve themselves in the auction of foreclosed properties.

For those who were duped into buying property built on mortgaged land there is some more good news:

According to a written statement by Cypriot government spokesman Nikos Christodoulidis late today (4 September), the Government has included seven amendments into the foreclosures bill. One of these amendments ensures the protection of property buyers who have deposited their sale contract at the Land Registry, but who have not secured the property’s Title Deed.

Bank of Cyprus deposit ratings for upgrade

Nigel Howarth
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1
Bank of Cyprus deposit ratings for upgrade
Bank of Cyprus executives
Bank of Cyprus executives John Hourican (Group CEO) and Chris Hassapis (Chairman)

ACCORDING to an announcement yesterday by Moody’s Investors Service, the ratings agency has placed the long-term deposit ratings of Bank of Cyprus on review for an upgrade.

Moody’s action reflects the successful completion of the Bank’s €1 billion capital increase, which was approved by shareholders on 28 August, and which will significantly strengthen the bank’s capital buffers and improve its funding and liquidity profile.

According to Moody’s Rating Action, the review will focus on a forward-looking assessment of the extent to which the strengthened capital and liquidity levels will buffer the bank against continued asset-quality pressures, stemming from the still-stressed domestic operating environment.

This review will focus on the credit implications of:

  • the final form of the legislative amendments to the foreclosure framework in Cyprus, which will influence the bank’s ability to sell collateral and, in turn, manage provisioning and capital levels; and
  • the outcome of the European Central Bank’s (ECB) comprehensive assessment in October, which will determine any further potential capital needs.

Meanwhile the Bank of Cyprus announced on Monday that it expects its shares to be re-listed on the Cypriot and Athens stock exchanges by the end of October.

Property price falls slow

Nigel Howarth
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1
Property price falls slow

price fallsALTHOUGH downward price adjustments in the Cyprus property market are continuing, the Property Price Index issued by the Cyprus Central Bank for the second quarter of 2014 reports that these downward adjustments are slowing.

According to the Central Bank’s index, apartment prices fell by an average of 2.1% while house prices fell by an average of 1.8% over the second quarter. (This compares with a falls of 1.1% and 1.0% reported by RICS Cyprus last week).

Apartment prices

The Central Bank index reports that the largest quarterly decline in apartment prices were recorded in Famagusta, where they fell by 4.5% and Larnaca, where they fell by 3.0%.

Elsewhere apartment prices in Paphos fell by 2.8%, in Limassol they fell by 2.1% and in Nicosia (the capital) they fell 1.4%.

House prices

The largest quarterly fall in house prices was recorded in Nicosia, where they fell 2.1% and Larnaca, where they fell 1.9%.

Elsewhere house prices fell by Limassol fell by 1.9%, in Famagusta they fell by 1.3% and in Paphos they fell 0.1%.

Property contracts

The Central Bank index also reports that the total number of contracts of sale deposited at Land Registry offices during the second quarter was up 65.1% over the previous quarter.

Contracts in favour of Cypriot buyers increased by 80.6%, while those in favour of foreigners increased by 33.2%

Further reading

Central Bank House Price Index for the second quarter of 2014

Aristo boss seeks to counter accusations

Angelos Anastasiou
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5

BOSS of Aristo Developers Theodoros Aristodimou on Tuesday sought to counter accusations against his company, saying that after two months of rumours and investigations no one has asked the company for its views.

“No official state organ, neither the Attorney General’s office, nor the police have asked Aristo to offer its positions,” he said. “This fact upsets us greatly, and we can only hope that those who have been asked to provide evidence have been careful to provide accurate information.”

His statements came as Deputy Attorney General Rikkos Erotokritou warned the Paphos municipal council that issuing zoning and construction permits to Aristo in the Skali area of Paphos before the AG’s probe into a dubious sequence of events thus far has been completed would constitute de facto intervention in the investigators’ work and could entail criminal culpability.

According to local daily Politis, Erotokritou dispatched the letter as the municipal council’s previous decision in late July had deferred a decision until the end of August, presuming that investigations would have been completed by this time.

Back in July, mayor Savvas Vergas had tabled the developer’s file before the council, proposing the approval of zoning and building permits for a total of 177 plots for which Aristo had secured a demarcation permit.

But it later emerged that the plans for which the demarcation permits were issued were switched with new plans, which seemed to cede approximately 5,000m² previously designated as green space, back to Aristo.

Erotokritou argued that any decision with regard to Aristo’s application for the issuance of zoning and building permits would constitute an attempt to effectively legalise any wrongdoing established by the ongoing probe.

In turn, such an attempt could possibly incur criminal culpability by the municipality, or any party involved in such an attempt.

At a press conference on Tuesday Aristodimou implied that the incident has been staged by interests competitive to his company’s, since the issue regarding the demarcation of these particular plots surfaced in 2014, while the permits were issued in 2010.

“The issue arose once some realised that the demarcation was almost complete and development begun,” he said. “That is up to each of us to evaluate logically.”

He asserted that inadequately informed municipal officials carried out incorrect calculations and measurements for the constructible areas of his plots, green spaces, roads and parking spaces, resulting in the entire controversy.

The real gap between the municipality’s and Aristo’s calculations, Aristodimou said, does not exceed 900m², and his company could not benefit from it under any circumstances since the Land Registry routinely spots such mistakes and amends developments accordingly prior to issuing title deeds.

Asked whether the Attorney General’s office is likely to be led to erroneous conclusions, Aristodimou said he would be able to form an opinion if he had access to the evidence gathered by the Attorney General’s office – which he does not.

“However, I trust the justice system immensely,” he said.

Thousand crocodile theme park in Cyprus

Nigel Howarth
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29
Thousand crocodile theme park in Cyprus

Nile crocodileSHORTLY after I moved to Cyprus plans were unveiled for a 50 feet high statue of Aphrodite at Petra tou Romiou (Aphrodite’s Rock) in Paphos to encourage tourism.

During the following years a number of other proposals were put forward to attract visitors to the island, including: a Disney-style theme park near Oroklini; a conference centre at Monagroulli incorporating a record-breaking 135 metre high statue of an angel; and a seaplane landing and take-off facilities and a series of recreational developments in Paphos, none of which got off the ground.

The latest ‘initiative’ comes from a consortium of Israeli and Cypriot businessmen who plan to build a theme park in Psematismenos with 1,000 Nile crocodiles.

It appears that the Israeli authorities want to get rid of crocodiles in their country and their slaughter has already been banned – prompting the company to seek other markets.

The consortium has met with the Minister of Agriculture, Nicos Kouyialis, who has instructed Veterinary Services to study the proposal to ensure it guarantees the safety of visitors and residents. Obviously any escaping reptiles could pose a serious risk to humans and the environment.

The crocodile farm in Israel opened in 1987, but was ordered to close following the escape of 70 of the reptiles in 2007, which cause panic amongst the public.

Each crocodile has a value of approximately €2,000 and consumes around a pound of meat a day.

Nile crocodiles can reach a length of 5 metres and weigh 1,000kg. The largest recorded specimen was found in Tanzania and measured 6.47 metres in length and weighed 1,090 kg.

If this proposal does come to fruition, I wonder what its impact will be on property prices and sales in the Psematismenos area?

Further reading

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