By George Psyllides
The cabinet on Wednesday approved additional measures to protect borrowers and primary residences as the government seeks to allay party concerns over a foreclosures bill that must be approved for the island’s next bailout tranche to be released.
“We are talking about three bills, the insolvency framework, and two schemes for additional protection of primary residencies,” government spokesman Nicos Christodoulides said after the meeting, held in the presidential residence in Troodos.
The measures include abolition of bank privileges that allowed them to impose unfair terms and changing the interest rate law to scrap the bank’s right to raise rates unilaterally.
They also make it mandatory for banks to inform borrowers and guarantors about any changes to the base rate and generally of any other changes that concerning it and the loan installments.
Banks must also display the method of calculating the base rates and the conditions and parameters contributing to any changes.
Lenders must also specify clearly in the loan agreement, and inform borrowers and guarantors about the way of calculating and conditions regarding the interest rate for late payments, which should not exceed 2.0 per cent.
The Central Bank can also impose an administrative fine on any bank that fails to comply.
Borrowers will also have the right to report any violations of the code of conduct concerning loan restructuring to the Central Bank or the attorney-general.
The foreclosure procedure will be suspended if there is indeed a violation or the bank had failed to implement the provisions of the code.
The provisions do not affect any other rights the borrowers have.
The government spokesman said negotiations with international lenders were continuous.
“It is not easy but we are working and talking with the Troika and we think we can convince the Troika,” Christodoulides said.
President Nicos Anastasiades will send party leaders a letter on Thursday and convene a meeting with them for Friday morning, the spokesman said.
The aim is for the bills to be sent to parliament by Friday.
Both the Central Bank governor and the finance minister have warned MPs of the dire effects a possible rejection of the bill would have on banks and the economy.
The governor said the value of the mortgaged loans in the upcoming stress tests would be zero if the bill was not passed, meaning Cypriot banks would need more capital.