Newsroom / CNA
More than 23,000 persons have applied to the island’s two largest banks for a suspension of loan repayments, as retail borrowers and companies are trying to preserve disposable income amid the economic activity shutdown due to the coronavirus pandemic.
The Ministry of Finance issued a decree allowing eligible borrowers, described as those who at the end of February had no arrears exceeding 30 days, to request a loan repayment suspension.
According to information gathered by CNA, applications had exceeded 11,000 by Monday at the Bank of Cyprus, the island’s largest lender, which has moved to approve the overwhelming majority of applications.
At the Hellenic Bank, the second largest lender with a predominantly retail loan book, applications exceeded 12,000.
95% of applications were filed by eligible borrowers, with 80% of applications coming from retail borrowers and 20% by corporate.
As far as retail borrowers are concerned, around half of the applications are associated with housing loans, consumer credit and credit card limits.
Both banks have clarified that the suspension of loans is set to begin following the approval of the respective law, irrespective of the date of the application’s submission.
The European Banking Authority (EBA) and the Single Supervisory Mechanism as well as the local regulator, the Central Bank of Cyprus (CBC), have clarified that loans to be frozen under the legislated and general loan repayment moratoria will not be considered as non-performing, while banks following by the EBA and the CBCB have announced they will not compound interest over the nine-month suspension period.