Central Bank of Cyprus Governor Constantinos Herodotou is meeting with heads of commercial banks on Tuesday March 21 to discuss the hot issue of fair and sustainable restructuring of loans.
This is what Philenews reports, adding that the message he will send is that CBC’s goal is to support borrowers on the one hand and contain the island’s high non-performing loans on the other.
A CBC directive already regulates the arrears management framework and establishes a Code of Conduct between Authorised Credit Institutions (ACIs) and borrowers.
However, rising interest rates imposed by the European Central Bank along with continued inflationary pressures have put pressure on borrowers who complain about unfair loan restructurings as well as refusal by credit institutions to carry one.
Herodotou is expected to focus on loan portfolios and stress that these need to remain healthy at all costs.
Because the prevailing conditions increase the risk of reducing the ability of borrowers – individuals and businesses – to meet their obligations each month.
At the same time, higher interest rates have also put the brakes on demand for new loans and this may force banks all across Europe to revise their credit expansion targets.
In Cyprus, the credit conditions had improved in recent years with a significant drop in the NPLs to 10% of total loans in September 2022.
