Central Bank of Cyprus governor Constantinos Herodotou has sent a letter to banks and credit acquisition companies regarding short term loan restructurings and fee transparency, calling on their CEOs to assist in the conclusion of viable loan restructuring.
“Under the extraordinary economic conditions of the last 18 months and in relation to the prevailing climate of uncertainty, concluding timely and viable restructurings, as well as bringing sustainable businesses and households back to normal operation, benefit the economy and financial stability,” Herodotou said.
“To this end, providing comprehensive information to borrowers in order to conduct the most efficient, fair and constructive negotiation possible is a necessary component,” he added.
Furthermore, Herodotou also noted that both the Central Bank of Cyprus and the European Central Bank (ECB) have taken a number of measures to help banks carry out necessary restructurings in a timely manner, to support sustainable businesses and households and, in turn, economic activity.
“Banks are expected to respond swiftly by offering sustainable restructuring, where needed, taking advantage of the temporary capital requirements relaxation offered to them”, Herodotou stated.
In his letter, the governor attached utmost importance to fee transparency and recalled the banks’ obligation to comply with the provisions of the Code of Conduct on the handling of borrowers in financial difficulties, as well as the main objectives of the code.
The code of conduct includes providing communication guidance and helping borrowers, banks and credit acquisition companies achieve mutual understanding; encouraging cooperation between banks and credit acquisition companies, and borrowers to render arrears management effective; and ensuring that banks and credit acquisition companies provide adequate information and full explanation to borrowers about their rights and obligations regarding arrears and restructuring.