The House finance committee on Monday said it would for the time being sit on a bill proposing that mortgages granted prior to passage of the foreclosures law on September 9, 2014 be exempted from foreclosure proceedings.
The legislative proposal was tabled by independent MP Anna Theologou. It is co-sponsored by Edek’s Marinos Sizopoulos and the Greens’ Giorgos Perdikis.
Committee chair Averof Neophytou (Disy) said the majority of MPs on the committee decided to wait for a package of government bills related to the issue of non-performing loans (NPLs).
Last month the government said it was in the process of preparing proposals on how to improve the insolvency and foreclosure laws in a bid to tackle NPLs, especially those held by the state-owned co-op bank.
Current legislation, passed in 2015, makes it difficult for banks to recover their money, something repeatedly pointed out by the EU and the IMF.
The co-op bank has the biggest exposure to loans with primary residences as collateral. In 2017, co-ops extended the collateral recovery period to seven years, a move that cost €150m in provisions.
Neophytou said that Theologou’s proposal, as well as any others submitted by other MPs, would be discussed together once the government bills are tabled.
“We shall wait for all the proposals so the matter can be discussed and decided in its totality,” he said.
Earlier, officials from the government and the central bank had warned that Theologou’s proposal would wreak havoc on banks’ balance sheets, as it would strip them of the power to exert pressure on debtors not keeping up with their mortgage payments.
Officials said European institutions would have to conclude that the foreclosures and repossessions system in Cyprus is ineffectual, and as a result request that Cypriot banks raise their capital provisions.
Akel deputy Stefanos Stefanou accused the government of dragging its feet on the issue:
“It convened meetings at the presidential palace, it committed to bringing proposals. None of that has happened yet,” he noted.
Also on Monday MPs gave the go-ahead to the government’s appointment of two non-executive members to the board of the Cyprus Cooperative Bank.
The appointments are also subject to the approval of the Central Bank of Cyprus and of the European Central Bank (ECB).
As a systemic lender, the Cyprus Cooperative Bank is under the supervision of the ECB.