The Central Bank of Cyprus is mulling changes to commercial banks’ targets regarding non-performing loans, governor Chrystalla Georghadji said on Wednesday.
Speaking after a meeting with President Nicos Anastasiades at the Presidential Palace, Georghadji said the regulator is “considering changes on non-performing loans”.
In a statement, the Central Bank said the governor had been referring to the targets the regulator had set for banks in 2015, in collaboration with the Troika of international lenders that bailed out cash-strapped Cyprus in 2013.
“[The targets] are no longer considered to serve the purpose for which they had been set,” the statement said.
“The aim is to boost banks’ efforts to reduce their stock of non-performing loans.”
Therefore, the statement added, the Central Bank of Cyprus is considering amending the targets, and also considering moves toward amending targets for non-performing loans at European Central Bank level.
Meanwhile, delegates from the Troika – the European Commission, the European Central Bank, and the International Monetary Fund – will be arriving in Cyprus at the end of this month to review aspects of the economy including public finances, reforms, and the financial sector, as part of Cyprus’ bailout package.
During their stay, the island’s international lenders will examine the state of the country’s economy and public finances, the finance ministry’s estimates of future performance, the government’s 2018 budget and reforms in progress.
Such reforms include the introduction of the national health system, six government bills on modernizing the public sector, local-government reform, the creation of a national investment fund and exploiting government assets.
At the central bank, the delegates will review ongoing challenges in the banking sector, mainly the trajectories of non-performing loans and loan restructuring.
Since Cyprus exited its economic-adjustment programme in March 2016 ahead of schedule, the Troika delegation has conducted two post-exit reviews.
As agreed in Cyprus’ bailout agreement, post-programme reviews will take place twice a year until Cyprus has managed to repay 75 per cent of the €7.3 billion it utilized – out of the available €10 billion.