The Finance Committee, which considered the amendment of the OXS law to allow for the purchase and sale of a loan portfolio
The Non-Performing Loans of the Housing Finance Organization amount to 43.69%, amounting to €274 million, according to the data provided by the General Director of the Organization, Christoforos Kaplanis, to the Parliamentary Committee on Finance, which was examining the amendment of the OXS law to enable the acquisition and sale of a loan portfolio.
According to the information provided by Mr. Kaplanis to the Commission, out of a total loan portfolio of €627 million, €274 million is NPL. He noted that the total amount of loans does not include a loan to the Republic of Cyprus of €251 million and government bonds of €117 million, nor the loans given with funds of the Agency, as they are off the balance sheet.
The €274 million includes the requests of the OIKIA project, amounting to €60 million, which are pending evaluation by the General Accounting Office. In addition to these, the Organization will also show interest in the Rent for Installment plan, while at the same time it is running the Agency's plan, for which, as he said, an extension was given, HOSTIA, while it was preceded by the internal restructuring plan HERACLES. It is also expected, he said, that a new internal restructuring plan will be approved.
Mr. Kaplanis, answering questions from MPs, said that for a total of 1.5-2 years, the Organization's Board of Directors could not meet due to incomplete composition. This delayed the consideration of restructurings, which were not included in the above plans.
According to the DG of OHS, the sale of a problematic portfolio will be the last resort to which the Organization will resort to remedy the problem, as it respects its social role.
He also noted that the sale of MED's portfolio will free up funds that can be channeled into housing loans for young people, as well as human resources, as currently a quarter of OXS employees are employed in the MED Management Unit. When the problem subsides, he said, they could be moved to the front line for receiving and approving new loan applications, as, he said, due to the increase in interest rates at other banks, a large number of borrowers want to transfer their loan to OHS, which keeps its interest rates at 2%. Indicatively, he said that in the 8th month more approvals have already been given than in the whole of last year, noting, however, that there is a long waiting period.
He also emphasized that the message must be given to the public that “loans are not given” to the Organization, mentioning indicatively that there are borrowers who have never paid an installment or who have delays of twenty years. He noted that, by amending the OXS law to allow the sale of NEDs, “to convey the message that there is no such thing as fireproof”, and that OXS, the state and the taxpayer should not be exploited, “because they believe that they will not OXS does nothing”.
He added, moreover, that due to the dual nature of the OHS – it is governed by the supervisory framework of the Central Bank, but also by the Ministry of Finance as a public body, any portfolio sales must be done through the tender process and will necessarily take time. Indicatively, he said that even if the bill were approved today, “it will not be possible to process it before 1.5 years”. In the interim, he repeated, “we will exhaust the HOUSE, the HOST, the BODY, the installment rent and our own efforts.” He noted that “we want to maximize the collection effort ourselves” as “our own funds are saved”.
In response to a question, he also noted that on September 1, OXS met with the Minister of Finance, Makis Keravnos, and stated that the Minister “was encouraging that we do what we need to do to save OXS and its capital base”.< /p>
On the other hand, regarding the possible purchase of loans from OXS, Mr. Kaplanis clarified that this will concern serviceable loans that are consistent with the purposes of OXS loans: housing, renovation, student, medical care. It is not about business loans, he said, as OHS has no intention of entering other sectors of the market.
As mentioned by the representative of the Ministry of Finance, Anthi Hatzicharalambous, the law that governs the operation of the OHS does not prohibit, but neither does it explicitly state that the purchase and sale of loans is allowed, therefore it is considered appropriate to amend the law in order to have the relevant provision. He clarified that the loans that OHS intends to sell will not be loans that have been granted with state funds, but those that have been granted with funds from the Organization, after securing the consent of the Central Bank.
The President of the Parliamentary Committee on Finance, Member of Parliament of DIKO, Christiana Erotokritou, stated in her statements outside the committee, that no one can survive with such problematic loans. He noted that the desire was expressed in the committee to give the tools to OHS to be competitive and sustainable to be able to support the dreams and aspirations of the new generation and young couples, at very competitive rates. Mrs. Erotokritou stated that the debate will continue next week, so that the bill can be brought to the Plenary as soon as possible.
Within the committee, Mrs. Erotokritou stated that the sale of credit facilities in recent years, “however justified, was done in an aggressive manner.” He wondered whether there is a design in the OHS so that the exercise of this tool is not done “in a cold impersonal process, but indeed exhausts, in good faith, all the possibilities of conciliation for the borrower”, and is indeed the last option selling the loan, not the easy option.
For his part, DISY Member of Parliament, Haris Georgiadis, within the committee, clarified that there is the relevant legislation for the purchase and sale of credit facilities, however it is considered that a special amendment to the OXS law is needed. He noted that it is indisputable that OXS is funded by customer deposits and therefore these must be absolutely safe. It is, therefore, of vital importance, he said, that OHS should be able to get rid of the NEDs, with all the means at its disposal, restructurings, adjustments and sales, like all other institutions.
The Member of Parliament of AKEL, Andreas Kavkalias, stated in his statements that while OHS admits that it did not respond to all that it should have done in order to advance the various plans to support the borrowers, while the rent-for-installment plan is ongoing and while he admits that was unable to respond as it should, due to its own weaknesses, to requests for sustainable restructurings, requests through the specific bill to proceed with the sale or purchase of loans.
“The sale of loans to credit buyouts and loan management companies should not be qualified as the easy option to resolve NPLs,” he said, noting that “more needs to be done” to support both the OHS and its mission. but also all those borrowers who need to be supported.
EDEK Member of Parliament, Ilias Myrianthous, said that a way should be found in which the OHS does not lose revenue, as it is the taxpayer's revenue , but to also find a way to recover the loans and if restructuring can be done, so as to favor both the borrower and OHS to continue its social work.
In addition, he said that in his question, it was confirmed by the FSA that the problem loans arose from the financial crisis of the last years, therefore “the argument” that they are all defaulters is “debunked”. Noting the social role that the Organization must perform, Mr. Myrianthous stated that safeguards must be put in place “so as not to lead OHS to be another bank” that will sell off in the same way.
Alekos Tryfonidis, Member of Parliament of DIPA-Synergasia, stated in his statements that his firm position is the support of OXS and its support to be able to fulfill its social role. He noted that with this bill, it is expected to improve the profitability of OXS, to release funds that will enable it to grant new loans to young couples and students.
In addition, he reiterated the position of DIPA for the urgent need to immediately upgrade the OXS on many levels, such as the technological upgrade and its staffing with permanent staff. He noted that OHS will be called upon to contribute decisively and creatively, because it will be one of the pillars of the unified housing agency that is in the government's governance program.
The MP of the Environmentalists Movement-Citizens' Cooperation, Stavros Papadouris noted that, due to the fact that the OXS Board of Directors could not meet, restructuring requests remained unanswered, with the cost of the delay being borne by the borrower. Mr. Papadouris also referred to a portion of borrowers, whom he characterized as strategic defaulters, who have the “mentality” that OHS loans should not be repaid. “These are the cases we don't want to help or cover,” he said.
Regarding the loan sales, Mr. Papadouris noted that OHS handles state funds and if the sales will reach 35- 40%, as was done with the commercial banks, “it would be good for the OXS to have second thoughts, so that they can offer the borrower long-term repayment through installments, to collect 70-90% of the loans”. Finally, he noted the “missed opportunity” of OXS to process loan transfers, due to its low interest rates.
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