The focus now turns to the effective implementation of the new regulations, states the announcement from the Ministry of Finance, welcoming the revised foreclosure framework.
The Ministry emphasizes that the discussion on modifications to the foreclosure framework has been exhausted, ensuring a balanced safety net for those in need without compromising the effectiveness and stability of the auction framework in times of financial stability.
As correctly stated by the Ministry of Finance, the emphasis should now be on implementing the new regulations and the foreclosure process itself, which essentially has never been allowed to function since its approval.
This is due to unforeseen developments (such as the pandemic) and prolonged suspensions due to political interventions.
As a result, more than a decade after the onset of the financial crisis, the Cypriot economy still grapples with one of the highest private debts in the eurozone, particularly at the household level, where traditional restructuring methods have proven more challenging to implement.
Recent data submitted to the Parliament reveals that the total non-performing exposures in banks and Credit Acquiring Companies (CACs) are approximately €25 billion.
Of the €22.5 billion managed by CACs, €21 billion, or 93% of the total, exhibit delays exceeding five years. These are not a result of the recent pandemic-induced situation.
Cyprus shares a stagnation characteristic with other countries, such as Greece. In Greece, it is estimated that over the next five years, starting from 2024, non-performing loans amounting to €10 billion will return to the banking system as performing loans.
The need to end uncertainty surrounding the auction framework had been highlighted recently by Fitch Ratings when upgrading Cyprus’s outlook from “stable” to “positive,” commenting that “resolving uncertainty around the auction framework could lead to further reductions in non-performing exposures and private debt metrics.”