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Government urges no extensions to suspending foreclosures

Unnamed (1)

The government warned opposition parties for the umpteenth time on Wednesday that changing the foreclosures legislation would have negative consequences on banks and possibly create the need for fresh capital.

Government spokesman Kyriacos Koushos said the administration held the same position as the central bank governor on the issue.

“The central bank governor’s position (in parliament) was clear; a change would lead to unpredictable consequences and if the framework is weakened, there is a danger for increased capital needs in banks with unpredictable consequences for them and depositors,” the spokesman said.

Koushos said there were alternatives, one being protection of primary residences through a state-backed mortgage relief scheme. The other plan was to turn the entity left behind by the former co-op bank into an asset management company that will offer mortgage for rent schemes to stricken borrowers.

Opposition parties are bent on amending the legislation ahead of the parliamentary elections in May, despite the warnings.

Banks warned it would further bolster the weak repayment culture and impact the lenders’ capital and provisions for bad debts.

It could also prompt ratings agencies to downgrade Cyprus to non-investment grade, a move that would make it impossible for the island to borrow from international markets.

 

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