Central Bank Governor Constantinos Herodotou has sent a letter to banks and credit acquisition companies regarding short term loan restructurings and fee transparency.
A press release of the Central Bank, says that in his letter Herodotou calls on bank and credit acquisition companies CEOs to assist in the conclusion of viable loan restructurings.
Herodotou emphasized that “under the extraordinary economic conditions of the last 18 months and in relation to the prevailing climate of uncertainty, concluding timely and viable restructurings, as well as bringing sustainable businesses and households back to normal operation, benefit the economy and financial stability. To this end, providing comprehensive information to borrowers in order to conduct the most efficient, fair and constructive negotiation possible is a necessary component”.
Furthermore, he noted that both the Central Bank of Cyprus and the European Central Bank (ECB) have taken a number of measures to help banks carry out necessary restructurings in a timely manner, to support sustainable businesses and households and, in turn, economic activity. “Banks are expected to respond swiftly by offering sustainable restructuring, where needed, taking advantage of the temporary capital requirements relaxation offered to them”, Herodotou stressed.
According to the press release, in his letter the Governor attached utmost importance to fee transparency and recalled the Banks’ obligation to comply with the provisions of the Code of Conduct on the handling of borrowers in financial difficulties, as well as the main objectives of the Code as follows:
– Guide the communication and transaction of banks and credit acquisition companies, and borrowers towards achieving mutual understanding and cooperation,
– Encourage cooperation between banks and credit acquisition companies, and borrowers to render arrears management effective,
– Ensure that banks and credit acquisition companies provide adequate information and full explanation to borrowers about their rights and obligations regarding arrears and restructuring.
The Governor also recalled the European Banking Authority’s guidelines on handling complaints, issued in 2018.