Even if the President of the Republic was thinking of re-appointing Konstantinos Herodotos for another term at the Central Bank, the conditions and his performance in the matter of protecting borrowers they have difficulty repaying mortgages, they do not advocate.
By Manolis Kalatzis
In December 2023, the European Banking Authority conducted a comparative assessment study in relation to the protection of borrowers in seven countries (Cyprus, Greece, Hungary, Lithuania, the Netherlands, Portugal, Slovakia).
The results could to be described as disappointing for Cyprus, which doesn't seem to be doing much to protect vulnerable borrowers before their homes are taken by commercial banks for sale.
At the bottom the Central Bank of Cyprus
For the purposes of evaluating the Central Banks of the seven countries, six sectors were selected.
The first concerned the level of implementation of the guidelines of the European Banking Authority EBA. The second was related to the effectiveness of supervisory authorities in relation to the way commercial banks operate. The third had to do with the effectiveness of supervisory measures to ensure commercial banks' compliance with the relevant default tolerance requirements. The fourth evaluated the effectiveness of supervision by the Central Bank, taking into account the creditworthiness of commercial banks and the correct and sufficient information of borrowers. The fifth area concerned commercial banks' demonstration of flexibility to arrange loans and how effective these arrangements were. Finally, the fifth area was related to the effectiveness of supervision by the Central Bank for the risks to borrowers.
These six areas were evaluated over a period of six years.
Cyprus only recorded full compliance in one area, like the other six countries. This is the area of implementation of its guidelines European Banking Authority.
In the remaining five sectors the results were disappointing and the performance of Cyprus was worse than the remaining six countries.
In four other areas, it is noted that some evaluation criteria are met with deficiencies, which affect the overall effectiveness of the competent authority (Central Bank), with the result that some essential risks are not addressed. These are the second, third, fifth and sixth sectors.
In the fourth area which concerned the effectiveness of supervision by the Central Bank, related to the correct and sufficient information of borrowers, before commercial banks sell their houses, Cyprus is the only country that does not at all meet the criteria have been set, leaving borrowers unprotected and exposed to the demands and manipulations of commercial banks.
The table presented is indicative.