Credit acquisition companies bought 141,478 Cypriot loans at €3.2 billion — a 20% discount on their face value. They have since collected €5.7 billion.
Yet, the loans they hold have not shrunk: they have grown, to €18.5 billion, because interest has continued to accrue throughout.
That dynamic, laid out in confidential Central Bank data that has been circulated among officials, goes to the heart of why political parties are now racing to overhaul Cyprus’s foreclosure laws before parliamentary elections in May.
The data shows non-performing loans in Cyprus have surpassed €25 billion in total — higher than the approximately €15 billion recorded at the height of the 2013 financial crisis.
The credit acquisition companies’ €5.7 billion in collections broke down as €3.6 billion in cash repayments, €619 million from property recovery after failed auctions, and €1.5 billion from property-for-debt swaps.
The companies have recouped more than they originally paid. The government is concerned about the continued application of interest and compound interest on the non-performing loans.
KEDIPES, which took on 77,561 co-operative bank loans worth €7.5 billion, had an outstanding balance of €5.7 billion as of June 2025, of which €5 billion remained non-performing.
Within the banking system itself, 24,736 NPLs worth €1.45 billion were on the books last June — down €86 million since December 2024.
That last figure matters politically. Because banks have shed a large share of their NPLs, parties now argue that changes to the foreclosure framework are less likely to threaten financial stability than they would have been in 2013 — and that argument is driving the legislative push.
Government vs parliament
The Ministry of Finance does not appear inclined to pursue legislative changes, according to information available to Phileleftheros.
It maintains that borrowers already have the tools to protect their primary residence — through the Financial Dispute Resolution Authority or the courts — and notes that following the 2023 legal changes, which strengthened the Commissioner’s powers, borrowers did not make adequate use of the new measures.
The ministry is, however, considering restoring the Rent-Against-Instalment Scheme targeted at specific borrower categories, and will assess the fiscal cost before making any final decisions.
Parliament is moving in a different direction. Members of the parliamentary Finance Committee agreed yesterday to discuss the foreclosure issue on 9 March, with around 20 to 30 legislative proposals from all parties already pending before the committee and more expected in the coming days.
“A pogrom of foreclosures”
AKEL MP Aristos Damianos did not mince his words. There is currently a “pogrom” of foreclosures, he said, with thousands of people losing their homes.
There are no restrictions on which properties can be foreclosed, leaving citizens unable to protect their primary residences or small businesses.
Movement of Ecologists (Greens) president Stavros Papadouris backed that assessment, saying parliament has one last chance to resolve the issue and pointing to what he described as a legislative gap in the current framework.
The proposal from AKEL and the Greens would restore borrowers’ right to seek a court injunction suspending the foreclosure of the home they live in, in cases where banks have applied illegal charges or abusive clauses.
Protecting guarantors
A proposal from DISY, DEPA, EDEK and independent MPs — which commands a parliamentary majority — focuses on a different vulnerability: guarantors.
Under the proposal, if a bank or credit acquisition company proceeds with an auction or property recovery, the guarantor’s liability would be capped at the original loan amount minus the proceeds from that auction or recovery.
Where creditors do not proceed with an auction or recovery while simultaneously releasing the guarantors, they would be required to await a court ruling before taking any action against guarantors in cases where the borrower is contesting the amount owed.
DEPA’s wider package
DEPA president Marios Garoyan will present further proposals in parliament on Thursday, built around the goal of protecting primary residences and maintaining social cohesion.
The centrepiece is a suspension of foreclosures on primary residences worth up to €350,000 until the end of the year, to give the state time to close gaps in the legal framework.
Alongside that, DEPA proposes making the Financial Commissioner’s decisions binding and final for disputes not exceeding €50,000; making the Central Bank’s code of conduct mandatory; and requiring banks to fully apply Central Bank guidelines on primary residence refinancing up to first-degree relatives.
On debt relief, Garoyan called on the government to restore the Rent-Against-Instalment Scheme in a more inclusive form — open until the end of 2026 and designed not to exclude vulnerable groups.
He also proposed a Special Solidarity Fund, fed by a levy of up to 15% on each mortgaged creditor — bank or investment fund — for every property foreclosed or recovered.
Two further proposals would ban additional interest charges where the total debt has reached double the original amount, and write off any remaining balance where foreclosure proceeds fall short of the mortgage debt plus interest owed.
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