Eleftherias Paizanou
The Ministry of Finance and the Financial Commissioner Pavlos Ioannou are making an effort to find a formula for the loan guarantors, which will satisfy the opposition, the government and the Commission, in order to prevent the risk of non-disbursement of the next € 85 million. month from the Recovery Fund, as part of the second installment.
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The bills strengthen the legal framework for the management of non-performing loans, something to which Cyprus is committed to the European Union. However, a majority of the opposition parties will not pass the bill unless safeguards for guarantors, collateral providers and related parties are added. This will happen through the amendment of ELAM, DIPA and the Ecologists, which is gaining ground, but the government disagrees. The amendment restricts the access of credit facility management companies to the Artemis database and the Land Registry database, in order to obtain information on guarantors, collateral providers and related parties.
The Ministry of Finance disagrees with the amendment and considers that it calls into question the bills, as, as it was said a few days ago in Parliament, their philosophy changes and their original purpose will not be achieved, something that the EU will not accept. It was mentioned that in case the amendment is approved, the evolution of KEDIPES into a bad bank may be affected.
From the side of the Legal Service it was reported that the amendment conflicts with several articles of the constitution and violates the right to contract but also the principle of separation of powers. The government, seeing the persistence of the opposition and in an attempt to get out of the impasse that arose, sat down at the consultation table to have convergences, which in fact be incorporated in the bills, which will be substantially revised.
A competent source told “F” that there are convergences between the ministry and the Finance Commissioner, who is in contact with the parties, while studying the EU directive. In fact, postponing tomorrow's discussion of the issue in the Parliamentary Committee on Finance is not irrelevant, as it was done to complete the procedures for finding a consensual solution. The basis for discussion is the note of the Financial Commissioner submitted to the Parliament on January 10, as well as the European directive dated November 21, 2021, which concerns the operating framework of credit facility management companies. A competent source stated that the relevant directive does not refer at all to the guarantors, the related persons and the collateral providers.
According to information, the Ministry of Finance seems to accept the exclusion of providers and related parties from the control of their data, but disagrees with the exclusion of guarantors. The Financial Commissioner, despite suggesting that not all guarantors be included in the bill, has come up with an alternative proposal, in case this cannot be implemented. Among other things, he proposed the exclusion of only the guarantors in loans of the Co-operation and the Housing Financing Organization, however, the suggestion from the government side does not seem to be accepted. As the exclusion of related parties and providers from the bill now seems to be key, two scenarios for guarantors are being considered. Specifically, on the table is a proposal for credit facility management companies to have the right to conduct a thorough investigation into the finances of the first borrowers and then to check through Artemis and the Land Registry for guarantors. The second proposal under consideration stipulates that, before the specific companies have access to the guarantors' data, they should proceed with a filtering and take into account the previous 4 to 5 laws concerning the guarantors. It is estimated that within the next week a revised text will be submitted to Parliament, in which there will be safeguards for guarantors, which will stem from other legislation.
