Insider Economy ECB supervisory official cautions against changes in Cyprus' foreclosure law

ECB supervisory official cautions against changes in Cyprus’ foreclosure law

Visiting Chair of the Supervisory Board of the European Central Bank Andrea Enria began talks in Nicosia yesterday amidst parliament’s intention to amend the island’s existing law on foreclosures, basically slowing down the process.

And the European official has sent the message that non-performing loans must reach levels close to Europe’s average, according to insiders. In the Eurozone, the average at the end of the year’s first quarter was 3.8%, while the NPL ratio in the Cypriot banking sector remains the second highest.

Against this negative background, the European official has also stressed that if there are any amendments to the insolvency and foreclosure frameworks these must not undermine their effectiveness. Because this would significantly complicate, and even impede, the ongoing NPL resolution efforts, insiders also said.

Another message sent out is that it is essential to ensure that any amendments do not further weaken payment discipline by strengthening incentives for strategic defaults.

The EU’s Single Supervisory Mechanism considers the island’s existing foreclosure framework, as amended in the summer of 2018,  as helpful towards the reduction of NPLs. That’s why Enria underlined that amendments that put obstacles to the process should be avoided.

The Central Bank of Cyprus but also commercial banks do not want repetition of the bleak case of the collapsed Cyprus Co-operative Bank where supervisory authorities had zeroed from balance sheets primary residence collateral. The outcome was that the Co-op bank urgently needed a capital increase.

Insiders said that when meeting either with CBC officials or political party leaders in Nicosia, Enria’s message was that the focus should be on measures that strengthen the process towards the reduction of red loans. And that no action that could lead to turbulence to the banking system should be taken, especially now that macroeconomic prospects are positive.

 

Read more:

https://in-cyprus.com/banks-set-for-a-capital-increase/

Top Stories

Labor Minister: Support schemes averted drastic rise in unemployment

The package launched by the government to support employees and businesses amid the coronavirus pandemic has averted a drastic rise in unemployment, Minister of...

Law for protection of welfare of animals voted

The Ministry of Agriculture hailed the voting of the bill to protect the welfare of animals by the plenary session of Parliament this afternoon. According...

EU fines Teva, Cephalon 60.5 mln euros for delaying cheaper drug

The European Commission on Thursday (November 26) fined pharmaceutical company Teva and its now subsidiary Cephalon 60.5 million euros for agreeing to delay a...

‘Smart and green’ cities in Cyprus soon, Chief Scientist tells CNA

Can research and innovation provide solutions to better serve the citizen and reduce pollution in cities? The answer is that in practice this does...

Economic sentiment records slight drop in November

Economic sentiment in Cyprus deteriorated slightly in November, a business survey by the Economics Research Centre of the University of Cyprus, published on Thursday,...

Taste

Squash soup

Ingredients: 1 kg pumpkin, cut into small cubes, approximately 5 cups 2 medium (400g) sweet potatoes, cut into cubes, approximately 2 ½ cups 1 chopped leek, only...

Mezedes

No visit to Cyprus is complete without enjoying the traditional meal of many small dishes known as ‘meze’. This large feast, which has been a...

Prawns with fried cheese, barley shaped pasta

Put the barley shaped pasta into a small pan with salted water, bring to a boil and when tender, drain. Peal the prawns leaving...

Salmon and shrimp sheftalies

Mix all ingredients for tabbouli in a bowl and keep to one side so flavours can combine. Prepare the sheftalies: wash and soak the casing...