Financial Ombudsman Pavlos Ioannou said that the clean-up of banks’ balance sheets with the sale of loans does not effectively help tackle non-performing loans as it subsequently continues to exclusively burden the society, the Cyprus News Agency (CNA) reported.
Sustainable restructurings -to the extent they are possible- may constitute the most effective way of resolving non-performing loans, the agency reported citing a note submitted by Ioannou to the members of the parliament’s finance committee.
Ioannou was commenting on a draft law proposed by a group of Disy lawmakers to extending exemptions of borrowers involved in loan-to-asset swaps from capital gains tax, stamps and duties and other charges for one more year.
The exemption aiming at encouraging loan restructurings are expiring at the end of the year, lawmaker Marios Mavrides who together with Disy chairman Averof Neophytou and Onoufrios Koulla proposed the bill, said.
“These transactions should not be considered as regular sales of property,” he said in a telephone interview.
“Members of other parties in the committee supported the bill and proposed extending the exemption until the end of 2020 as the problem with the non-performing loans is expected to remain in place,” the Disy lawmaker added.
The Financial Ombudsman who also supported the bill, said that he also favoured extending the exemptions for three to four years.
Only “drastic and courageous economic policy measures” allow the effective tackling of the non-performing loans problem, deemed the most serious risk for financial stability in Cyprus, he said adding that “it goes without saying that these measures should in no way burden taxpayers and public finances”.