By George Psyllides
DEVELOPERS, who owe billions in loans and are not servicing them, on Monday asked for more time, citing the irregular situation in the island’s banking sector.
Speaking after a meeting with a delegation from the island’s international lenders, the chairman of the developers association Pantelis Leptos said first the situation must return to normalcy.
“Today we have restrictions in exporting currency and blocked deposits and if the necessary time is given for each case separately, these loans will be served,” Leptos said.
Developers owe banks over of €6 billion in loans, most of them considered non performing.
“When the situation is not normal in Cyprus’ banking system, we cannot all demand the rest to behave normally,” Leptos said.
As part of its €10 billion bailout, Cyprus agreed to shut down its second biggest bank, Laiki, and seize deposits to recapitalise the Bank of Cyprus.
Capital controls were introduced last year to prevent a bank run. Domestic controls – except opening new accounts – have been removed but overseas transfers are still restricted.
Leptos said there are four different euro currencies in Cyprus; the old and the new, the frozen and the free.
“This did not exist in other countries where the troika (of international lenders) intervened. So, here too there must be normality first before having demands from the marker and the people of Cyprus to behave normally,” Leptos said.
He said the association’s instructions to its members were to service their loans.
Leptos expressed optimism that the real estate sector will rebound, adding that the troika have been convinced it could show a difference in the next three years.
He said foreign investors are showing a big interest in Cyprus at a time when local buyers were still sceptical.
“There is still a negative sentiment in Cyprus, stemming from the fact that we still have blocked deposits, uncertainty in the market, and the messages are not positive. This must change,” Leptos said.
Developers knew there was big demand for real estate in Cyprus.
The troika delegation is currently on the island as part of the bailout programme’s fourth evaluation.