Cyprus Mail

BoC says moral hazard avoided with new law on sale of loans

By Stelios Orphanides

With the parliament’s Thursday decision to pass a law that will allow the sale of loans to third parties, even with the amendment proposed by DIKO, which gives a borrower a last minute opportunity to negotiate its purchase from the bank, “the major moral hazard has been avoided,” Bank of Cyprus’ director of corporate affairs Michalis Persianis said.

“The parliament acted rationally when it took its final decision, and even with some minor problems, a framework was created yesterday which introduces a very usual operation in banking to reduce non-performing loans,” Persianis said in an interview to state-radio CyBC on Friday. He did not specify the nature of the minor problems to which he referred.

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