The House finance committee on Monday concluded discussion of amendments to the Business of Credit Institutions Law, which allows banks to manage real estate properties and companies via debt for property swaps.
The bill, submitted by the finance ministry, is set for a plenum vote this Friday. It had been intended to go to the plenum floor last week, but was withdrawn at the last minute after parties decided further tweaks were needed.
One modification that has been locked into the amending law is a clause explicitly stating that, whereas a bank may appoint a manager at a company it has acquired a stake in, this shall not impact the rights of other shareholders.
Another amendment regulates the persons appointed as senior executives or managers at credit institutions licensed in Cyprus.
Under this, it is forbidden for persons to hold or act in such a position if they have been declared bankrupt or have been convicted for an offence involving fraud or dishonesty in any country.
A further proposed amendment concerns the appointment by the bank of a receiver and manager to companies controlled by the lender.
These appointments would take place only when a company is deemed not viable.
Citizens Alliance MP Anna Theologou warned that this would lead to the creation of ‘zombie companies’ which would be managed until their assets are sold off.
It would be better if banks were allowed to appoint managers only where companies are slated for liquidation, she argued.
Responding, a Central Bank official said the appointment of managers by a bank is merely a measure to ensure that no company staff is laid off.
In any case, the same official said, the law stipulates that banks may keep properties or companies on their books for up to three years.