Government welcomes Diko support on bad loans

The Cyprus government says it can work with opposition centrist party Diko to pass much needed comprehensive legislation on bad loans that would also pave the way for a co-op deal to go forward.

Diko leader Nicholas Papadopoulos, who spoke with President Nicos Anastasiades and Finance Minister Harris Georgiades on Monday, delivered a set of questions for clarification before his party can consider voting for the government-sponsored bills.

The meeting took place at a crucial moment when the government is racing against the clock to pass five bills through the House, one of which would make it possible for a co-op deal to go forward.

Hellenic Bank is set to take over the healthy part of the Cyprus Cooperative Bank, essentially its bank operations and assets except bad loans, but not without state guarantees for absorbing potentially high-risk loans in the co-op takeover.

Ruling party Disy does not have enough votes to pass a bill on state protection schemes, and as a result, MPs have gained footing in the debate, asking for earmarks and provisions on foreclosure and bankruptcy laws in exchange for voting in support of the legislative package.

Papadopoulos put forward his views on protecting borrowers who own primary residences with loans in the red, as well as their co-signers, while also calling for a clear-cut process of transferring non-performing loans out of the hands of the state.

But the scheme dubbed “Estia” could potentially have a number of terms and conditions for protecting primary residences that could become part of heated debate during a vote next week.

Papadopoulos shared his concerns over the bills with Anastasiades and Georgiades, asking for their assessment of the outcome in case there would be a negative vote in parliament.

He said he believed the government welcomed the proposals, something that was echoed later by the finance minister.