To avoid measures that could undermine the effort to reduce non-performing loans, the European Commission urged Cyprus, in the context of the preliminary positive assessment for the disbursement of the first installment of €85 million from the Recovery and Resilience Mechanism. These were conveyed to the Parliamentary Finance Committee by Avgi Lapathiotis, Financial Director of the Financial Services Directorate of the Ministry of Finance, at Monday's meeting, discussing the MPs' proposal for a further three-month suspension of sales.
As Mrs. Lapathioti explained, the positive evaluation of Cyprus, which was announced by Mrs. Von der Leyen, was preliminary and before the amount of €85 million is disbursed, the member states must be convinced, while the final opinion is also pending , due on 25/11. “Everything we do during this time has an impact and we will be asked to answer how we achieve what we have committed to reducing METs,” he said.
If everything goes smoothly and all member states are convinced, the disbursement of the first installment of €85 million will take place on 2/12, he said.
Responding to MPs' questions on the matter, Ms. Lapathioti said that during the discussion of the results with the Commission, the question of the suspension of sales was raised, while she said that the issue is also being discussed by rating agencies.
Regarding the Rent for Installment Plan, Ms. Lapathioti noted that the request has not been submitted to the European Competition Commission yet, however it is expected that there will be approval by the end of the year.
On behalf of the newly formed Association of Credit Acquisition Companies and Credit Facility Administrators, Byrons Byrons said that another suspension will not help. He pointed out that the fact that a large part of NPLs has left the banks' portfolios does not mean that they have left the Cypriot economy.
He pointed out that interference with sales does not provide solutions. He stated that there are mortgage safeguards dating back more than 10 years. In addition, he said that the mentality of overturning the implementation of legislation creates a negative image for the place and affects investors, while finally he noted that without the divestments, financing cannot work either.
In the discussion that followed, AKEL Member of Parliament Aristos Damianou once again requested from the Ministry of Finance a list of the final beneficial owners (UBOs) of the credit acquisition companies.
AKEL Member of Parliament Andreas Kavkalias said that when the legislative framework was changed and the borrowers' right to appeal to the courts was removed, there was no corresponding consideration for insulting investors. He added that the Commission was informed by the governor of the Central Bank that no loan management company has submitted an application to the Central Bank, as required by legislation passed in July. He asked the Ministry of Finance where the effort to harmonize the legislation with the European directive regarding credit acquisition companies stands.
Sotiris Ioannou, an ELAM member of parliament, said that “the risk assessment of the summer by the Ministry of Finance is being repeated”, noting that in the summer the Ministry of Finance said that the rent-for-installment plan was at risk with the suspension of sales. He noted that the suspension given in the summer expires tomorrow and the plan has not yet been implemented. “We are coming to protect the vulnerable, until the rent-for-installment plan is implemented,” he said.
The Member of Parliament of DIPA, Alekos Tryfonidis, said that in the summer the Ministry asked the Parliament to pass the law on divestment companies, in order to disburse the tranche, while now new milestones are being set. He referred to “disrespect” in the behavior of credit companies, while he questioned whether companies are willing not to sell to vulnerable groups, single parents, the unemployed, but to strategic defaulters.
Stavros Papadouris, Member of Parliament of the Environmental Movement, said that the reason a new moratorium on the expropriations is being requested is because “we have not yet seen the installment rent and modifications in the context of the expropriations. I wish it wasn't necessary, we have to.” He also mentioned that the appeal in Cyprus takes years while the auction takes 9 months. Finally, he mentioned the issue of the settlement which is not done in installments, but requires either a one-time payment and then installments or a one-time repayment of the loan, after the loans are terminated, as a result of which the borrowers are unable to respond and are led to the auction.
It is noted that the MPs Andreas Kavkalias, on behalf of AKEL, Sotiris Ioannou on behalf of ELAM, Ilias Myrianthous on behalf of EDEK , Alekos Tryfonidis on behalf of DIPA and Stavros Papadouris on behalf of the Environmentalists, submitted a proposal for a law to extend the suspension of the mortgage sale process until January 31, 2023. The previous suspension that had been passed expires at the end of October.
