Latest Headlines

Non-performing loans continue to mount

Latest information released by the Cyprus Central Bank shows that non-performing loans continue to mount with property developers having amassed billions of debts that they are unable to repay.

non-performing loansACCORDING to the latest data from the Central Bank of Cyprus, non-performing loans at the end of January rose to €26.5 billion.

The Central Bank reports that non-performing loans with the commercial banks have reached 40.85% and the co-ops 47.47% of their total loan portfolios, while four of ten loans granted for home purchases are not being serviced.

At the end of January 2013, €14.7 billion of the €31.55 billion loans granted to companies were non-performing.

Property developers have amassed billions of debts that they are unable to pay. In construction 66.15% (€4.7 billion) of all loans granted are not being serviced, while elsewhere in the real estate sector 47.16% of loans are non-performing.

Meanwhile the Bank of Cyprus is reviewing its restructuring plans in a move that could result in billions of euros of its troubled assets being put into a “bad bank” and the Cyprus Government is grappling with legislation to prevent the seizure of “primary residences”.

Readers' comments

Comments on this article are no longer being accepted.

  • Steve says:

    The nightmare that is the financial status of Cyprus just gets worse. Am I right in thinking this is as big as the deficit that caused the bailout and the crisis of two years ago? This is a debt covered up for years now by the Cyprus banking system and brought to light by the Troika’s insistence that banks define non-performing loans in Cyprus the way they are defined by the rest of the EU, so overnight there are massive unrecoverable debts to be shown on the balance sheets.

    The EU has two major concerns that it wants to address above all others. The first is the survival of the Euro and the second is the survival of the banking system. It is unimaginable that a little state like Cyprus can cause the failure of both of these and pretty soon by the look if it. What is needed is the same as last time; the hard-working, efficient, fairly honest Germans are going to have to bale out the Southern Europeans again, but this time they might well attach some pretty stiff conditions that make the last round of expenditure cuts and tax increases look like the Teddy Bears’ Picnic. On the other hand, maybe the Russians will be more sympathetic this time when the Cypriot finance minister goes begging on his knees.

    Who will the biggest losers be? Look at your neighbours in Cyprus without title deeds and remember they will be looking at you.

  • John Swift says:

    Why aren’t the conveyencing solicitors or the Cypriot law society being dragged before the EU? These are the people who could and should have prevented this from day one.

    It’s one thing blaming the banks and developers but to me the legal people are the worst offenders.

  • Andrew says:

    It looks like they have moved from needing to establish a bad bank to needing to establish a VERY BAD BANK.

    Will all those guilty of creating this fiasco ever be made to account for their actions. Will the bankers, lawyers, developers, etc, ever face trial? Or will ordinary hard working European citizens simply lose their life savings.

  • MartynG says:

    As predicted, a complete and utter MESS. I’d wager that Mr. Hourican has never seen mega-complex shambles like this in either his native Ireland, or whilst ‘sorting’ RBS.

    Through poor governance and legal incompetence it seems, in terms of relative size of economy, it looks like Cyprus is going to have the biggest and most entrenched ‘Bad Bank’ in living memory?

  • Mcmini says:

    Couldn’t agree with you more Janner. More & more people just walking away from ‘their’ property and turning their backs on Cyprus. All have a story to tell and all are spreading the word about the corrupt little Island in the Med. No one is willing to buy anything here and that wont change until this mess is sorted. And lets face it, its never going to end well.

    But what I want to know is why my ‘Im so broke I can’t pay my tax bill’ developer still lives in a huge mansion and is swanning around in a brand new 4×4 ? Then will the government start chasing him & confiscating everything he has ?

  • George says:

    Why don’t they freeze the developers assets and go after their bank accounts? Wherever they are? Seems like the developers run Cyprus. I live in Africa and yes there is corruption but not to the scale in Cyprus. But if you buy something its yours if you don’t pay it gets taken by the bank and we call Africa third world?
    I wish some one would take the bull by the horns and sort this out.

  • Janner says:

    Not all NPL’s are for the same reasons. Some choose not to pay because the corrupt system allows it (most developers). However, others choose not to pay because they believe they have a valid legal argument for not doing so and the only way to bring this to ahead is to withhold payment. This owners of this type of NPL may chose not to pay because there is no point as they don’t bloody own the thing and probably never will. There are those on this forum who did everything right (or at least trusted their lawyer) and bought their property outright (or so they thought) and still don’t have title deeds and still don’t own it. Why would those who have a mortgage/loan on a property (not really on a property but on a debt) bother paying when the result will be to end up like the ones who have paid in full and still don’t have their deeds. This is all about ownership and it just drags on and on and on. Once the courts make a decision we will all know where we stand. Did the bank know what they were doing when they lent the money? Bloody right they did! Make sure you have your assets squared away before embarking down this road though! It will get messy and it will take a long time. I really don’t think the government/banks have any idea how to sort this out. A person who has stopped paying their mortgage because they believe they will never own the property and were misled by the bank and a corrupt lawyer does have a case in my opinion. I’m no lawyer but I think it will be very difficult for the banks to win such a case. How can there be so many people in the same boat without there being a serious problem with the system. What if the parties try to reach an out of court settlement. The NPL party may say that they will start repayments if the title deed is issued with their name on it. Whoops! Another big problem. It sounds like a reasonable offer but legally it can’t happen without writing off the developer debt and the banks can’t afford to do this. Its just constant delays and I very much look forward to the banks arguing why a purchaser, who’s loan is non-performing, should continue to pay for something they thought they owned and why they should pay for something they can never own! Its all about the money!!

  • Costas Apacket says:

    Well we never saw this coming did we?

    Not half!

  • mh says:

    Well, we all know the saying ‘if you owe the bank thousands, then you’re in trouble, but owe the bank billions and they’re in trouble’.

    As the developers have guaranteed the loans for individuals, why are the bank coming after people whose properties have not been completed? Probably because the developers are deeply in debt!

    This is not going to end well. There are thousands of cases working their way through various courts, but not one decision has been made, because the banks are stalling proceedings hoping and praying ‘things pick up’.

    Pack of cards with a monsoon on the way! Goodbye Cyprus, it’s never being nice knowing you.

  • The views expressed in readers' comments are not necessarily shared by the Cyprus Property News.

  • Text size

Back to top