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Opposition slams insolvency bill

Opposition parties AKEL and EDEK have slammed the final bill in the insolvency framework claiming that it does not offer absolute protection for home owners and others who are unable to repay their loans.

Opposition slams insolvency billTHE FIFTH and final bill of the insolvency framework, a crucial element for the implementation of the foreclosures legislation, will be discussed at a joint meeting of the House Finance and Interior committees today.

Ruling DISY party MP Andreas Kyprianou said that the bill satisfies many of the opposition parties’ concerns and noted that it has to be approved by Parliament so that Cyprus can join the ECB bond purchase program as well as secure the next tranches of its bailout loan from the troika of international lenders.

But the draft bill, which was approved by the cabinet last Friday, has been slammed by opposition parties AKEL and EDEK who claim that it does not offer complete protection to vulnerable home-owners and others who are unable to repay their loans.

Deputy Parliamentary Spokesman for AKEL Stavros Evagorou said that his party will not back down on its position of protecting primary residences, SMEs and loan guarantors – adding that AKEL will submit an amended bill.

EDEK considers that there are both positive and negative aspects to the bill and that it will introduce amendments to protect primary residences and SMEs if necessary.

DIKO MP Angelos Votsis described the bill as “complex” noting that some of its terms will result in the mandatory restructuring of loans under certain conditions while providing a way out for loan guarantors.

The European Party said that people should not fall prey to the banks for a second time and that the insolvency framework must protect them effectively.

The Green Party stressed that the protection offered by the bill contains a number of loopholes that could result in mass foreclosures.

Meanwhile Pierre Moscovici, EU Commissioner for Economic and Financial Affairs, told reporters at a Eurogroup press conference on Monday that Cyprus has to implement the foreclosure law without delay.

“On Cyprus, I would also like to again stress the importance of implementing without any further delay the Foreclosure Law, which has been suspended again recently by the Cypriot Parliament. The entry into force of this law is an essential precondition for addressing effectively the problem of non-performing loans, which is the main challenge for the Cypriot economy at this time.

“We all recognised that Cyprus has made impressive progress in building a new and more sustainable basis for jobs and growth over the past two years. It would be a great pity if this progress were slowed due to this one issue. I understand that the adoption by the Cypriot Ministerial Council and tabling to Parliament of the Insolvency Bill should help to expedite this process, and I hope that this will be the case and that the programme will soon be on track.” he said.

Readers' comments

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  • Adrian says:

    Is this the same opposition that had no problem getting the legislation passed to allow transfers of up to 1,000,000 euros out of the country. Don’t worry once all their cronies have their money out they will pass the insolvency bill. I don’t watch the House of Cards for nothing!!

  • @scruffy on 2015/03/11 at 12:38 pm – I agree that the corrupt/dubious practices are widespread here (I receive emails virtually every day from those who have been scammed, mis-lead, etc. seeking advice).

    Regarding the MoU & Title Deeds (which was to reduce the number outstanding for more than one year to less than 2,000). This was not a condition of the release of any tranches of the bailout loan. However, implementation of the foreclosures law was a condition for the release of funds (check out the latest MoU dated September 2014).

    It’s known that many of the big borrowers are ‘strategic defaulters’ – i.e. they can pay but are currently refusing to do so. The foreclosures law will help the banks put pressure on these borrowers to repay. (This is why it is widely believed that opposition parties are trying to protect their ‘koumbaro’ rather than the so-called ‘vulnerable groups’).

  • graham young says:

    Yet another instance of wealth transfer of property and land from those struggling to make their commitments to the elite- banking institutions, and those who control the central banks, by design I’m afraid.

    These sharks made the economical climate for the masses to create insolvency for many. Loans on money that simply created from a printing machine and digits punched into a computer, then fed into banks at near Nil %, not backed by anything. All part of the most fragile ponsy pyramid scheme in recent history, Stock markets at record highs around the world underline there is something seriously wrong, the plan WILL crash, fractional reserve lending WILL end, and soon. when it does the 1% will be unscathed.for the rest of us, who knows , but it won’t be pleasant. Those in control and their puppets are feathering their beds for when this happens, its so obvious.

  • Stuart says:

    For some months on this forum, the behaviour of Opposition Parties has been analysed to death with the conclusion that they are either a) protecting ‘vulnerable groups’ (definition awaited) or b) trumpeting the heroic ‘No’ in order to gain the support of the electorate (as identified by Nigel) or c) for some reason protecting Developers, Bankers, Lawyers and ‘Political glitterati’ as Mike so aptly describes them.

    I must also agree with Mike that ‘self-responsibility’ factors into much of the debate on the current position regarding the non-repayment of loans. Taking the UK situation, for example, the Standard Variable Rate mortgage can vary at the discretion of the lender and, if interest rates increase, everyone has to suffer and pay up or risk losing their property. Every UK mortgage carries a statutory warning to this effect and asks if interest rates should rise, whether you can continue meeting your repayments.

    The concept of taking out a mortgage in a currency other than that of the native country in which the purchase is taking place would seem to be a high risk strategy and not to be undertaken lightly or merely by the attraction of lower interest rates elsewhere. It would be astonishing indeed in the UK to ever be offered anything than a mortgage in pounds sterling or for any financial advisor to recommend a foreign currency deal due to the obviously inherent risks involved.

    None of this means we have no sympathy with or do not care about those caught up in financial dilemmas such as that outlined by Janine which are very well understood and have been articulated by many overseas buyers in these columns previously.

  • scruffy says:

    @Mike

    While it is probably true that many individuals in other countries have been hoodwinked, mis-sold, badly advised etc, the difference here in Cyprus was the sheer scale of these corrupt practises and then, as we find today, no one is interested in providing remedies to rectify the damaging consequences to individuals.

    Eg. one condition of the MOU was that all title deeds must be issued by Q4 of 2014.

    This hugely important development has not been even nearly achieved. Why then have the EU not even mentioned it far less threaten to suspend funding because of the failure to implement it.

    Yet they have withheld funds due to the delay in foreclosure.

    Now, if as you say, there is a bigger picture and foreclosure laws are more important to get the economy going, what comes after that?

    There will never again be a property market in Cyprus when it is clear that you can lose your home despite having paid in full for it.

    The only reason that the foreclosure laws have been given such importance is that its the only way they, (including the EU), who wasted so much money, can hope to recoup some.

    Until the EU puts more emphasis on Cyprus (and other countries) righting the wrongs on ordinary citizens it will never be taken seriously and ultimately not survive.

    The bigger picture is a fallacy to me as any success that the EU have so far claimed eg. Ireland Spain, Portugal. (They were even claiming Greece was a success story last year) is sheer fantasy. The man in the street cares not a jot about fiscal policies and Bond investments and all the other crap that they go on about.

    All he wants is a job and a roof over his head.

    The EU is on the point of collapse I believe and it is precisely because they have failed ordinary citizens (not only in Cyprus)through failing to get their priorities right.

  • richard says:

    Spot on Janine!

  • Denton Mackrell says:

    I think both Peter D and Scruffy & co are right. As I have commented several times before (months ago), we need to distinguish between, on the one hand, the ‘average’ Cypriot borrower and ‘ordinary’ foreign buyer and, on the other hand, those buyers (primarily foreigners) who were subjected to the depredations of rogue developers/lawyers/banks operating in Cyprus as a joint criminal enterprise against them.

    Of course borrowing debts have to be repaid. The problem here in Cyprus is that, in the case of their toxic loans to some property buyers, there appears to be no acceptance by the banks that they have done anything even faintly morally wrong let alone criminal. Moreover, the government too chooses to turn a blind eye.

    Don’t expect in Cyprus any of the kind of government-driven investigations into banking malpractice such as happened (and will continue to happen) in the UK viz. mortgage mis-selling, PPI mis-selling etc and the compulsory compensation schemes that followed. Don’t expect dodgy bankers and bent lawyers in Cyprus to be dismissed, disbarred, prosecuted and jailed.

    From the statements and behaviour of most of the political parties here, they are all fellow travellers with Syriza in Greece whose politburo chiefs blame northern EU member states for all their financial woes. Ergo, when Greek finance minister Varoufakelakis (sorry, couldn’t resist the pun) says that northern EU member states should permanently subsidize the southern ones, yes he does literally mean that all the hard-working taxpayers in UK, Germany etc should be grateful for the privilege of subsidizing the profligate, incompetent, negligent and corrupt regimes in countries such as Greece and Cyprus and the self-indulgent debt-inflated lifestyles of their citizens.

    With such attitudes, do you honestly expect that the troubles of foreign property buyers in Cyprus caused by the institutionalized joint criminal enterprise will ever be acknowledged much less tackled? The developers, banks etc all imagine that they will soon be able to pick up where they left off before the 2013 crisis i.e. lying, cheating, defrauding, mis-selling, palming off toxic loans and mortgages to unsuspecting foreign buyers. This time, however, at least there will be masses of red-flag warnings when any potential buyer does an Internet search on property buying in Cyprus.

  • Mike says:

    There appears to be an attitude of ‘nobody understands’ and ‘being simplistic’ here again when I believe the reality is in fact that most understand perfectly well and in infinite detail what the situation (as a whole is). Sadly currencies fluctuate, last year the €/£stg rate was almost par to 1.1 today it is 1.4+ and rising. Yes it is understood Banks, lawyers, Agents etc mis-sold / advised, probably by deception, or omission of pertinent facts to individual domestic buyers but to what degree that is covered by Cypriot legislation is unclear to me (as a Cypriot) and whether or not any home country or EU legislation has any influence or jurisdiction over Cypriot domestic remedies is for individuals to establish. It is disingenuous if not arrogant for anyone to believe that no one cares, save for the banks and lawyers perhaps, people do care but they also believe in self responsibility. I’m sure many individuals of all nationalities have been hoodwinked into bad purchases at some time in their lives although possibly none so life changing as one’s home thereby possibly using life’s savings but there is a bigger picture here and I may be wrong but I don’t think for one minute any of this AKEL / EDEK procrastination has anything at all to do with protecting vulnerable individuals but more to do with protecting billions in NPLs and their guarantors amongst the so called ‘elite’ and I use the term very loosely, ruling classes including developers, Banks, Lawyers and Political glitterati.

    Our options as a nation are clear, our options as individuals are clear, Greece is an example of what is and possibly will come to pass if we do not get this right. Human rights legislation is in existence within the EU, albeit almost toothless for individuals unless sovereign domestic remedies are exhausted. We should not be so arrogant to assume it is only overseas buyers who have been duped into inappropriate borrowings for homes, many locals, generally of the younger generation, have too. All share the same plight. The disastrous consequences of failure to implement this legislation could possibly make all claims of mis-selling academic.

    I truly believe Nigel has this spot on and the opposition parties are, as always, only garnering support for futile and in the main unachievable goals in much the same way as the current Greek administration did. Desperate people are easily manipulated as history has shown us.

  • Bonz says:

    It seems the opposition’s tactics extend to logging on to this site with multiple user id’s.

  • scruffy says:

    @Janine

    I have to agree with you. There are many, many more like Peter D, who in my opinion, have no idea how complex some of the situations are that many have found themselves in, through no fault of their own.

    To simply say “you took a loan so now you must pay it back” shows complete ignorance of how badly the banks were run and how corrupt they were regarding loan collateral, use of POAs etc

    Unless they are in the position of paying the banks thousands for potentially nothing in return or thousands more than they thought they’d signed up for, they perhaps should not be making such simplistic comments.

  • Janine says:

    I am not sure Peter D fully understands the plight of overseas buyers. It is not the case we don’t want to pay. You forget that Swiss Franc loan contracts @2% pa interest only were signed by dodgy POA’s, on behalf of unsuspecting buyers – it was a case of ‘Agree, or lose your 5%-30% deposit!’ These were loans that were only affordable at 2%. But the banks increased their margins to ~ 5%, whilst the CHF substantially appreciated against £/euro. Repayments quadrupled – no surprise the loans became NPLs – and of course the property market collapsed. Until the banks resolve the problem THEY caused, there will be no recovery. Please don’t expect the innocent buyers to pay and lose their properties!! I will pay what I agreed originally. So far the bank is not interested, they want 3 times the original amount back, on a property worth 1/3rd the original sales price. They can have the property back, but I want compensation for the deposit, and costs to date. Simple!

  • scruffy says:

    I don’t believe the opposition parties are that stupid either. Which leads me to believe that there ARE many loopholes that the bank can (and definitely will) exploit.

    The banks have never taken any responsibility for their participation in the destruction of the Cypriot economy (which was huge) and with their ridiculously high interest rates, refusal to restructure loans, refusal to lend to SMEs,(despite orders from the ECB to start doing do so), refusal to rectify the mis selling of Swiss Franc loans etc, etc, they have contributed nothing towards the recovery of the Cypriot economy and now bleat about their “misfortunes”.

    Their ridiculously high percentage of NPLs is something they themselves created through their incompetence and lack of due diligence and all this government and the EU muppets care about is getting their precious fiscal policies and bank balances to look good again on paper.

    No thought for the misery they cause the ordinary Cypriot citizen.

    We have seen their great pretence played out already in Greece(see Cyprus Mail) and they will try the same here in Cyprus.
    Being one of those caught up in the “deeds fiasco” I have seen or heard nothing in their foreclosure proposals that would help me (in fact all Ive heard so far, is how much easier they will make it for the bank to screw me) and I am sure that there will be a hundred other scenarios involving other vulnerable groups where there is no protection proposed either.

    So, decry all you like the opposition parties but until the government and the banks show some common sense and take some responsibility for the mess THEY helped make, I wish them good luck.

  • @Sam Mabrouk on 2015/03/10 at 3:22 pm – The opposition parties are trumpeting the ‘heroic’ no in efforts to garner support. I’m sure understand the damage they are causing to their country – they are not that stupid.

  • Sam Mabrouk says:

    As Peter said, if you can’t afford your home let it go, and rent instead. Legislature or government that is trying to fool the lenders will NOT recover the Cypriot economy, it will actually cause a bigger damage.

  • Peter Davis says:

    …”does not offer absolute protection for home owners and others who are unable to repay their loans”.

    Well that is the same in other countries.

    Pay up or lose the home.

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