Borrowers association says proposed measures ineffective in NPL reduction

The proposed measures by the government aimed at reducing non-performing loans (NPLs) will not effectively contribute to their reduction, the Association for the Protection of Bank Borrowers (Syprodat) said in a statement released this week.

The association argues that the initiatives outlined by banks and debt acquisition companies essentially offer no relief to borrowers, whom it refers to as “the most distressed segment of the population,” given the rising interest rates and the high cost of living.

“With these considerations in mind, the burden falls on the political parties to find definitive solutions to the serious issues affecting borrowers, which also impact the Cypriot economy,” the statement reads.

Regarding the proposed “rent against instalment” scheme, the association finds the prospects for eligible borrowers to be disappointing.

It also expects that the reintroduction of the “Estia” scheme will have minimal impact on NPL reduction.

Moreover, the association further questions the extension of the powers of the Financial Ombudsman, suggesting it will only assist a limited number of borrowers.

In addition, the association remains uncertain whether the suspension mechanism provided by the Central Bank of Cyprus for property auctions will be offered to a high number of borrowers, expecting a more narrow, selective implementation of the tool.

Syprodat said that it remains steadfast in its belief that reducing NPLs, a shared goal, can only be achieved through proper and sustainable restructuring.

“Proper and sustainable restructuring, which banks and management companies are obligated to propose to borrowers, will free them from the anxiety of potential asset sales,” the statement stressed.

Lastly, the association commends the initiative by state-owned asset management company Kedipes, which offers substantial aid by subsidising interest rates of €4.6 million to provide relief to borrowers.

It also acknowledged the two Themis plans, which it believes offer a real solution for resolving the problematic loans under its management.