Finance Minister Harris Georgiades welcomes the establishing of a special task force to tackle the massive problem of non-performing loans, but wants to see a distinction drawn between responsible and irresponsible borrowers.
The problem of Non-Performing Loans (NPL) was the subject of discussion at the Presidential Palace on Thursday, where President Nicos Anastasiades chaired a meeting with party leaders, along with Georgiades, House Speake Demetris Syllouris, Central Bank of Cyprus Governor Chrystalla Georghadji, and Financial Ombudsman Pavlos Ioannou.
Attention should be given to responsible borrowers who may be facing real and unforeseen hardships, not strategic defaulters
NPL’s make up one of the biggest factors holding back the economy, which is currently on the rebound. But as of November 2017, bad loans were at €21 billion or 44% of total loans in the Cypriot banking sector.
The finance minister said the banking sector is “moving in the right direction” noting that the core of the problem was at the unprecedented increase in bank loans from €20 billion to €70 billion in just a decade, from 2003 to 2013.
Good versus bad borrowers
“The banks are feeling the pressure which they then transfer onto their borrowers, and this is why it is prudent that we take action based on a distinction that I personally have always been trying to make,” Georgiades said.
Parliament had been discussing for a long time whether primary residences should be protected from foreclosures, as banks try to collect and reduce their exposure to bad loans.
But Georgiades pointed out that attention should be focused on those responsible borrowers who may be facing real and unforeseen hardships, not on those “strategic defaulters” who may be taking advantage of loopholes.