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15 June, 2024
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SYPRODAT and Government join forces to end non-performing loans

Cyprus battles to keep public debt in check

Newsroom / CNA

Finance Minister Makis Keravnos expressed satisfaction with the progress made in divestments and the reduction of non-performing loans (NPLs) during a meeting at the Ministry of Finance with SYPRODAT President Costas Melas and Association Director Jenny Papacharalambous.

Following the meeting, Keravnos thanked Melas for updating him on the association's efforts to combat NPLs, a pressing issue in Cypriot society. He emphasized the common goal of reducing NPLs and appreciated SYRODAT's contributions, stating, "Consensus is key, as mentioned by Mr. Melas."

Furthermore, Keravnos expressed his contentment that SYPRODAT acknowledged the government's efforts in this direction, including engagements with banks and credit acquisition companies, which have yielded positive results.

Melas described the meeting as highly productive and commended the Minister for pressuring banks and credit acquisition companies, resulting in tangible outcomes. The discussions primarily focused on two critical issues facing Cyprus: divestments and NPL reduction, with both parties reaching a unanimous agreement.

Melas presented a memorandum to the Minister outlining the Association's positions and ideas on how to address these longstanding economic challenges. He emphasized that progress is achievable as long as consensus and good intentions prevail, citing positive examples such as the Bank of Cyprus' recent initiative, Themis' plans, and Hellenic Bank's willingness to engage borrowers.

Melas optimistically declared that now is the ideal time to resolve these issues definitively, alleviating the burden on borrowers and transitioning loans from NPLs to serviced status.

Switching topics, the Finance Minister acknowledged the trend of European states issuing government bonds to individuals, which has led to pressure on banks to increase deposit rates. Keravnos noted that the Ministry had studied the issue and related proposals, emphasizing the uniqueness of each country's circumstances.

He cautioned against issuing bonds when not required, especially when striving to reduce public debt, stating, "Increasing public debt without necessity is not a rational course of action." Keravnos also pointed out that the relatively small Cypriot market cannot absorb large debt issuances, making it unlikely to impact bank interest rates significantly.

In conclusion, he highlighted that even with substantial bond issues, the effect on banks' interest rates would be minimal, given the considerable deposits and loans within the banking system.

Cyprus  |  banks  |  loan  |  economy  |  government

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