Cabinet on Thursday adopted four new bills to improve the insolvency framework, as Finance Minister Harris Georgiades urged deputies to approve them.
The measures — intended to weed out weaknesses in the current framework which have hampered banks’ efforts to tackle the mountain of non performing loans — were approved at an extraordinary session of the Council of Ministers on Thursday.
Speaking to the media after the meeting, Georgiades said that since the approval of the insolvency framework in 2015, a number a weaknesses and gaps have been detected that have led to excessive pressure from the European Central Bank on the Cyprus banking sector, and by extension on borrowers.
“We consider that there is a need for urgent improvements to this legal framework that will make it more effective, easier to operate and fairer as there will be no change to the protection offered. The protection will remain unchanged but speed and effectiveness of the procedures will be bolstered,” he said.
The minister said that adoption of such changes without delay was “absolutely essential’ in the European banking union in which the Cypriot banking sector operates, so as to avoid risks that may arise if these weaknesses are not dealt with.
Indicatively he said, that every additional year needed for a foreclosure meant a cost of hundreds of millions on the banking sector in increased provisions and higher capital requirements, and this pressure finally translates into pressure on borrowers.
Georgiades appealed to the House of Representatives to approve the changes before it breaks for the summer recess. This was feasible since draft versions of the bills have already been discussed, he said.
And he noted that the changes are part of the preconditions set by the European Commission to approve the state support to the co-op and the setting up of an asset management agency as this ensures the agency can recover for the state the support it has offered.
Asked whether he shared the Central Bank’s view that non-implementation of the CCB-Hellenic Bank deal would be disastrous, he said: “I share the view of the Central Bank that under the circumstance the deal is the best possible, taking into consideration the possibility of measures by supervisors in the opposite case.”