Syprodat Seeks finance minister meeting to tackle non-performing loans, foreclosures

The head of the Association for the Protection of Bank Borrowers (Syprodat) Costas Melas said on Monday that he requested to meet with finance minister to present him with new ideas for reducing the amount of non-performing loans (NPLs).

In his interview with the Cyprus News Agency (CNA), Melas said that along with meeting Finance Minister Makis Keravnos, he also requested to meet with Central Bank Governor Constantinos Herodotou.

“Our central idea is to find a way through restructuring to avoid foreclosures, with consent, without affecting the current legislation,” Melas said, who first refers to the holding of the meetings, before publicly presenting the association’s ideas which will contribute to the reduction of NPLs.

He also mentions that Syprodat will also request a meeting with the main local banks, as well as with the credit management companies to present the association’s ideas for reducing NPLs.

Asked to comment on the recent meeting of Keravnos with the banking association, Melas said that the meeting took place in the context of efforts “to find consensual solutions for the relief of borrowers” and added that “the effort of the minister is persistent and intense, and we thank him very much.”

However, he separated the issue of protecting vulnerable groups of the population from the matter of reducing NPLs.

For supporting vulnerable groups, he said that the government has already introduced a measure that must be implemented as soon as possible.

Regarding the reduction of NPLs, Melas added that the issue can only be solved with long-term, consistent policies, which Syprodat has said would be from long-term restructuring in accordance with the code of the central bank.

“Excluding overdrafts, the legally owed balance is agreed upon, which with a reasonable interest rate the borrower can continue to pay,” and “this loan is removed from the list of NPLs,” he explained.

He added that if there is difficulty servicing the loan, then by restructuring the loan can be serviced.

The benefit for the borrower, according to Melas, “is that the stress of foreclosure goes away since he will be able to pay the agreed instalment. For the Bank, the benefit will be that it will start collecting liquidity,” he added.

Asked whether foreclosures are currently taking place, Melas said that with the ongoing processes by all involved bodies “it is perceived that foreclosures are being set aside.”

“Consultations are now underway with the parties, for the government’s new proposals regarding the management of NPLs” and “at the same time initiatives are being promoted by the banks and credit management companies, since they invite the borrowers to a meeting for discussion with the aim of finding consensual solutions to regulate their loans,” he added.

He also said that Themis Portfolio Management Limited (‘Themis’) has announced details of plans to deal with NPLs, which are already underway and has called on borrowers to “take advantage of the opportunity that is presented to them.”

According to Melas, the initiative of the Chief Executive Officer of Hellenic Bank to invite vulnerable borrowers to trust the bank is also welcome, stressing that, “we are willing to put our hands very deep in our pockets….”

“With all the above processes, it is understood that the foreclosures are set aside,” he noted.

Melas suggested to the specific banking entities to embrace all borrowers and not only specific categories, for the simple reason, as he said, “that everyone is affected by the crisis of increased interest rates and unprecedented accuracy.”

Besides, commenting on the positions of President Nikos Christodoulides regarding the economy as they were expressed in a recent interview, Melas in principle welcomed the government plans, which will indeed help the vulnerable groups of borrowers, as he said, while he agreed with the position of Christodoulides on the issue of foreclosures.

“We agree that the culture of payments should not be undermined, nor should banks’ efforts to reduce NPLs be hindered,” he said, adding that “it is important to maintain a responsible attitude and mutual understanding between banks and borrowers.”

However, Melas disagreed with the president that there was a Law Proposal that weakened the framework of the sales and added that “the so-called ‘AKEL Law Proposal’ and other parties and MPs was not rejected by the Parliament due to a tie”.

“The proposal of the Law did not weaken or even touch the current framework of sales, as the President of the Republic claimed at the time”, he added.

He also stated that “this proposal simply gave the borrowers the right to appeal to the Court seeking effective judicial protection, (as required by relevant European directives as well as the Jurisprudence of the European Court of Justice), if and as long as there were overdrafts on their loans as well as abusive clauses in their loan contracts”.

Finally, referring to how the NPL problem arose, Melas said that “as is well known, it was created by the irresponsible over-lending that was done with the tolerance of the government and the central bank.”

“As if the financial ruin of thousands of Cypriots due to the scandals of the Stock Exchange and the real estate bubble was not enough, then (in 2013) came the near collapse of the Cypriot economy, haircuts and the illegal uncontrolled sale of securities and shares,” he added.

He also mentioned that “our fellow Cypriots for several years were practically without money.”

“Nobody doubts anymore the dire position borrowers are in due to rising interest rates and the precision of goods and services. No one can predict when they will stop burdening us all,” he concluded.