Foreclosure legislation unconstitutional

The latest piece of legislation on foreclosures which was approved last Friday is unconstitutional.

Finance Minister Haris Georgiades said that the Attorney General Costas Clerides recommended to the government that the law be referred to the Supreme Court. Reportedly Clerides specified that a number of provisions are in conflict with the constitution and European law.

Last week in an effort to reach a consensus that would allow banks to tackle NPEs while at the same time introducing safeguards, a DIKO inspired bill was approved, which gives the Financial Ombudsman increased powers and jurisdiction to act as an intermediary between banks and borrowers.

Georgiades said that President Anastasiades is awaiting further instructions from the Attorney General in order to determine the next steps.

Yesterday, a meeting was held at the Law Office of the Republic, with the participation of the Central Bank Governor and representatives from the Ministry of Finance, with the Attorney General offering a briefing on the state of play.

In July in a letter to Parliament President Anastasiades said that previously adopted amendments to the foreclosure legislation are unconstitutional, stating that articles 23, 25, 26, 28 and 30 of the constitution were violated.

Central Bank Governor Constantinos Erodotou prior to the vote informed the House of Representatives that he had ''received a message from the European Supervisory Mechanism, which clearly states that once delays and uncertainty arise in the schedule of banks, we expect a significant negative impact'' on banks' forecasts.

Rating agencies S&P and Moody's said they expect significant negative consequences for the Cypriot banking system if the proposed changes to the foreclosure law were to be approved.