House shifts into gear with Sunday bad loans session

It will be a long weekend for the House finance committee, which will hold emergency sessions ahead of a crucial Sunday vote on bad loans and state guarantees for Hellenic Bank.

The chair of the finance committee, ruling party Disy president Averof Neophytou, sounded confident on state radio Thursday morning, saying the House will pass all bills on non-performing loans (NPL) as well as a bill to provide state protection to Hellenic Bank over potentially high-risk loans.

But 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 provisions on foreclosure and bankruptcy laws in exchange for voting in support of the legislative package.

Neophytou, following a meeting between party leaders, said “all the parties showed understanding, including those who had different views on the bills,” adding that the matter will have be set and done by Monday. 

The House will go into session Sunday at 4pm, where MPs will vote on five bills on NPLs as well as a protection plan for certain home owners in the red. They will also vote on a state protection scheme for Hellenic Bank and three other amendments.

Hellenic Bank is set to acquire a healthy portfolio in the Cyprus Cooperative Bank (CCB), an institution which is burdened with NPL at 60% (nearly €7 billion), with the commercial bank absorbing co-op banking operations and assets except bad loans and toxic assets.

But Hellenic has demanded state guarantees for absorbing potentially high-risk loans in the co-op takeover.

If MPs fail to pass legislation on state guarantees this Sunday, ahead of summer vacation, observers say the Hellenic-CCB deal could be in jeopardy.