The expected vote in favor of the bill to extend the suspension of sales until October 31 will now test the banking system in practice. The new letter of the Central Bank of Cyprus to the chairman of the Finance Committee Christiana Erotokritou, requesting that the extension not be extended for three months, failed to convince the rapporteurs of the proposal, which was finally approved by 27 votes. while 15 voted against and there were 9 abstentions.
DISY asked for the vote to be postponed until the ECB sends its opinion (with Haris Georgiadis stating that DISY will also support the proposal if the opinion is positive), a request that was rejected. The counter-argument was that the vote on the current suspension (which was unanimous and broader than the new suspension) did not raise the issue of an ECB opinion.
The chairman of the Finance Committee, Christiana Erotokritou, said that the new suspension solves the gap created by the government's decision to withdraw the bills for the courts, which also provide for the establishment of special courts for the speedy settlement of disputes between banks and borrowers.
It is noted that the suspension concerns:
-Main residence worth up to 350,000 euros (from 500,000 euros covered by the existing suspension that expires at the end of July).
-Small professional business premises with an annual turnover of up to 750,000 euros (from 2 million euros).
-Processes worth up to 100,000 euros (from 250,000 euros).
The next day
It was clear from the parties' positions that there would be no resumption of sales unless a way was found to resolve the differences between banks and borrowers on the credit balance. Under the current regime, the borrower can sue the bank in court, but this appeal does not stop the sale process. If the mortgage is liquidated and the borrower is eventually acquitted (with the court reducing the credit balance), the bank will reimburse its customer. This process does not satisfy the borrowers. The government promised faster judicial proceedings, but the bills were withdrawn on the grounds that the parties' amendments altered the content of the reform.
It is noted that the Parliament also involved the Financial Commissioner, with the borrower resorting to his mediation if he deems that the bank does not comply with the CBC loan restructuring code. The appeal stops the auction, but still does not resolve the issue that raises a large number of borrowers regarding the determination of the balance.
The new suspension, however, creates a problem as the “freezing” of sales acquires permanent characteristics.
The Central Bank warns that a possible new extension, in its view, “tests the tolerance limits of rating agencies and institutions more broadly. The rating agencies are sounding the alarm about the ongoing amendments to the sales law, stressing the importance of maintaining a comprehensive, effective and stable legal framework. The same was stated by the European Commission in a relevant report on the country. “Therefore, the risk of a negative assessment of the framework by the European institutions and rating agencies is visible, with all the negatives that this will bring.”
The most likely development is for the President of the Republic to refer the law to the Supreme Court on the grounds of non-compliance with the obligation to consult the ECB, as provided for in Articles 127 (4) and 282 (5) of the Treaty on the Functioning of the European Union. Article 2 (1) of the European Council Decision (98/415 / EC).
