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Wednesday 15th July 2020
Home News Bank opens dialogue in Cyprus property mis-selling

Bank opens dialogue in Cyprus property mis-selling

AT LONG LAST there is real hope for thousands of people following a move by Alpha Bank to lighten the burden on borrowers who have fallen into arrears by offering them a repayment moratorium due to the economic downturn.

The Bank refers to it as a “gesture of goodwill”. Furthermore, during a meeting held at the Bank’s Head Office in Nicosia on 24th October 2012 with George Kounis, Consultant with Maxwell Alves, Solicitors in the City of London, the bank has expressed the desire to have a dialogue with all concerned borrowers and confirmed its readiness to resolve matters in an amicable way. Other banks are expected to follow suit.

“We have argued all along that there is no point in going head-to-head with the banks,” said George Kounis. “Litigation is not the answer. Banks will listen to reason. We are now in the process of submitting settlement proposals to Alpha Bank for each and every borrower we represent. We do believe the banks will settle.”

The battle, however, is not over. Even if the banks write-off substantial amounts from these debts, there is a lot that needs to be fixed in order to give these borrowers a fair chance of keeping or selling these properties. Properties have been sold with rent guarantees that were not honoured, amenities such as a Golf Course or a Spa that never materialised and there are numerous other irregularities. Banks can help by funding and putting pressure on developers but they cannot fix everything.

The Government can do a lot by diverting cash buyers, particularly from China, to purchase completed properties instead of pushing them to off-plan sales. “We believe that this is a mistake. They need to clear the existing stock of properties if ghost complexes are to be eliminated and prices start picking up again,” said George Kounis.

The Government must in any event eliminate the mis-selling environment. “If developers were forced to have separate title numbers for each unit in a development before they were even allowed to commence sales, if they needed the same licence as estate agents to sell property so that they could lose it if they mis-sold, if unlicensed sales agents and financial advisers felt the full force of the Law, if lawyers were properly disciplined and if banks were properly supervised, mis-selling would disappear overnight,” George Kounis declared.

Maxwell Alves have written to various bodies in Cyprus following up on these issues including the Central Bank of Cyprus, the Cyprus Bar Association, the Attorney General, the Cyprus Securities and Exchange Commission and the Minister of Interior. In particular they have formally complained to the Competition and Consumer Protection Service (CCPS) at the Ministry of Trade which ultimately is the authority that needs to co-ordinate and enforce action against rogue traders but the CCPS will not act despite the fact that it is their duty to do so under the provisions of the EU Directive on Unfair Commercial Practices which Cyprus incorporated into Law (103(1)/2007).

“Cyprus must decide whether it wishes to be in the EU in both body and spirit. They cannot use the European logo to attract investors and then treat them as if they are in an eastern bazaar when they try to complain,” said George Kounis. “We hope to persuade the authorities otherwise we will report the failure to implement to the EU Commission”.


  1. It would appear that there may be a potentially new way for Consumers to help improve the future Banking sector in Cyprus by making a relevant submission to the ICFCBS at

    The Independent Commission on the Future of the Cyprus Banking Sector has been set up by the Central Bank of Cyprus to make recommendations on ways to raise the strength of the sector, to improve supervision, and to promote banking competition in Cyprus for the benefit of consumers and businesses.

    Perhaps it would be useful for as many people as possible to let the ICFCBS know about such issues as the Alpha Bank situation and also about multiple loan / mortgage encumbrances commonly secured against the same property assets by Cypriot Banks?

  2. Who’s best interest are you speaking for i wonder, the banks were not to my knowledge willing to negotiate until litigation threatened but have been very keen to sell chf mortgages to the unknowing victims of developers mis-selling, the only reason they are now showing signs of wanting to negotiate is the threat of litigation and the fact that they know they were in the wrong!, I am also happy to negotiate with the bank (give me my money back and i won’t sue you) end of negotiation.

  3. The banks know that the properties are virtually worthless, that is why they do not want them back. Not only are they worthless but the mortgages on these individual properties are usually guaranteed by the developer. The developer has usually borrowed a considerable sum from the same bank to fund the project. The developer has probably not bothered to repay a single cent of the loan expecting the good times to roll on. The banks know they will get next to nothing back from the developer and as they are usually all friends/co-conspirators the banks do not really want to pursue a developer. That leaves the good old mortgage holder. The banks know that they can obtain a European Enforcement Order which is directly enforceable in the UK (or anywhere else in the EU) without further redress in your country of origin. It is a safe way for the banks to make use of EU law and ensure that they recover their loss.

    That’s why the Cypriot authorities do not want the TROIKA clause about selling the land belonging to developers who have failed to service their loans for 18 months. They know that if a chunk of land has say €1 million worth of mortgage debt and say the developer has racked up €3 million (as is the case in mine) securing this land against other projects as well (which seems to be the norm), then if the banks are forced to sell the land how on earth will they ever recoup €5 million?? They can’t, the same old wealthy vultures will be waiting to buy it for peanuts. These will probably be the clever developers who have defaulted in the first place and it will be the good old EU taxpayer who cover their losses at the bank!

    You couldn’t make it up!

    The only way I see of protecting our homes in the UK is to ensure that you get onto your MP and ask they contact Bill Cash MP in the ‘Cyprus Property Defence Group’. I think it is important that the UK Government recognise that the Cyprus property system is so deeply flawed that for the banks to be allowed to take our homes in the UK without any form of redress applying UK/EU standards is failing British subjects and should not be allowed. If enough people contact their MPs (approximately 40,000 Brits are caught up in this) then this should provide such a loud voice that the Government will have to take action to protect our rights.

    Cyprus should not and must not be allowed to pick and choose which bits of EU law it enforces. They seem to have no problem taking advantage of the European Enforcement Order mechanism, or trading on the name of the EU or even asking for bailout loans. But, they do seem to struggle and become very vague in other areas such as consumer protection legislation!

    Phew……..glad I got that off my chest. Think I’ll go and walk the dog now!

  4. @ Nigel Howarth. Hi Nigel have you ever heard of a Bank doing this? I have trawled the Internet but can’t find one example?

    I feel the banks don’t want these properties but would rather pursue buyers in the UK for their assets.

  5. Open dialogue?

    That’s not my experience. I have been trying to talk to the bank for some 4 years. The problem is “who to talk to?”
    It is a different person each time and all we get is “computer says no”.
    All they want to do is “get a judgement”. They see no value in the properties despite using them as collateral and despite a “forced sale valuation” which they issued and which they now say is irrelevant.

    Has anyone actually gone to court yet over their mortgage?

  6. @Dunn Good – this isn’t blackmail, let me try to explain.

    When you take out a mortgage to buy a house, the bank will need collateral. If you default on your mortgage repayments, the bank can seize the collateral from you and sell it to recover the debt.

    But the collateral, the house, is not yours until its Title Deed has been issued and registered in your name. This causes the bank a problem as it cannot seize the house should you default on your mortgage because it is not yours; it belongs to the developer.

    To overcome this problem, the developer has to act as the guarantor for your mortgage with the bank. If you then default on your mortgage, the bank can recover the house from the guarantor (the developer who owns it) and can then sell it to recover the debt.

    This problem is another facet of the ‘Title Deed cum-fraud-mess’ that we are all too familiar with and which could easily be overcome if the government acted to resolve it.

  7. We were granted a loan by Alphabank Ltd., in 2005 gave our legal adviser C.K. the P.of A. to sign the agreement. We were advised by our developer Hadjidemosthenos to arrive mid June to take delivery. On arriving found that the agreement had not been signed and handover refused. Apparently Alphabank H.O. had sent a memo to our branch saying that holding the Sales Contract as security was not safe for the loan and the Local branch declined the loan. They only went ahead with the loan providing the Developer Guaranteed the money. I wonder how many developers resulted to this blackmail by Alphabank and have they enough funds should the purchaser default.

  8. I see that Mr Kounis is basically stating the obvious the banks would like to negotiate as their position is weak, and declaring this as some sort of achievement is vacuous and, yet again, soliciting for clients.

    My question would be – if, as he maintains, that litigation is not the answer; what happens if the bank cease negotiating? Does he walk away? I suspect he may then advocate litigation is the only answer.

  9. Judging by the past record over the years of the Cypriot government, developers, banks and lawyers, do people for one moment truly believe that collectively they have any intention of changing tack?

  10. There are some +ives in this but let’s face it a Moratorium is simply a postponement of interest/capital repayments – and typically ‘gestures of goodwill’ are merely tokens, they don’t really remedy the underlying problems.

    So, some limited progress towards help for those poor souls who were mis-sold these high-risk property/financing deals.

    BUT: As has been said below, there are far too many IFs in George Kounis’ article: .

    “If developers were forced to have separate title numbers for each unit in a development before they were even allowed to commence sales, if they needed the same licence as estate agents to sell property so that they could lose it if they mis-sold, if unlicensed sales agents and financial advisers felt the full force of the Law, if lawyers were properly disciplined and if banks were properly supervised, mis-selling would disappear overnight,” He declared.

    Hmm, ‘disappear overnight’?

    Miracles do occasionally happen but I don’t sense any on the horizon that will fundamentally address the very serious fault lines that have been well and truly Institutionalised in the Cyprus property, banking, legal and financial and, most of all, Regulatory sectors.

    How many of us can foresee any early change when the country, as expected, gets a new government next February?

    We can all hope but – let us not hold our collective breaths!

  11. This moratorium is only a temporary reduced payment offer. It does not mean they are going to reduce the debt. What you owe is what you owe. Look up moratorium on Wikipedia and it reads:

    A legal official can order a delay of payment due to extenuating circumstances, which renders one party incapable of paying another.

    Take this opportunity to offload any assets because when this goes quiet Alpha Bank will come after you

  12. @Anna & @alexander – I believe you may have mis-read the article.

    The bank is offering a repayment moratorium to borrowers who have fallen behind with their mortgage repayments.

  13. I have sold almost everything I had which was of value except for my house, and also paid an inheritance into my Alpha Bank mortgage in order to pay it off as soon as possible. I still owe a few thousand Swiss francs.

    Does this report mean I wasted time and money when possibly the bank could have written off some of my debt?

  14. I discharged my Alpha bank loan in favour of a UK mortgage July this year.
    Does this mean I am no longer due compensation.
    I did not wish to compound my losses any more.

  15. We don’t know the details of the settlements being proposed or any Alpha Bank counter-proposals so it is too soon to be dancing in the streets.

    What I will say is that should the mortgages continue in Swiss Francs with some write off or postponement of payments, agony will be back in 5-10 years time because the Pound Sterling can be relied on to weaken further in the long-term. Any deal that does more than pretend to fix the problems has to include a switch from Swiss Francs into home-base currency, which for most people has to be the GB pound. If your assets and (pension) income are in Euros then a Euro mortgage is the one to go for. ABSF- anything but Swiss Francs (or even Turkish Lira).

    Remember, if the pound had appreciated against the Swiss Franc, none of the affected mortgage holders would be complaining about Alpha Bank, their lawyers and a Cyprus government that behave like a bunch of gangsters. We have to hope that when Christofias goes, Russian-style communist thinking and behaviour goes with him and the new government is made of the better stuff we all wish for.

  16. Is this just another smokescreen by the banks to give people a bit of hope and to convince Troika to push the EU bailout through? Once they get their bailout it will be back to broken promises, dragging their feet etc. Conditions were put on Greece but they just laughed at the EU and didn’t comply until a new government was formed. Lets all watch this space

  17. From what is continually being contributed to this forum it is pretty clear that Cyprus has already decided whether it wishes to be in the EU in both ‘body and spirit’. Unfortunately, they can and do use the European logo to attract investors and then treat them as if they are in an eastern bazaar when they try to complain.

    For decades the Cyprus authorities have steadfastly refused to be persuaded to change their customs and practices and their failure to implement the EU Directive on Unfair Commercial Practices, which was incorporated into Cyprus law in 2007, is a particularly striking example.

    This has already been reported to the EU Commission which in turn has singularly failed to take any punitive action against the Cyprus government other than to write a couple of friendly letters asking what progress is being made.

    Before being swept along on another tide of Mr Kounis’ premature elation, read again the article entitled “A plan for all reasons” published here in August this year and note the ‘reality check’ being described in most of the contributors’ comments.

  18. Is this the first sign (publicly) that Alpha Bank is worried. I have to agree with ‘trell70’ though.

    Even if the bank will renegotiate, restructure, re-whatever! It doesn’t change the fact that you don’t actually own it!! This is clearly of such significance that it cannot be ignored.

    My stance is that unless Alpha Bank bend considerably, this sorry saga can only be resolved through litigation/courts.

  19. Alpha Bank has not listened to reason and this is why the victims have been forced to take legal action. The CCPS have refused to act. They want all the benefits of being part of the EU without following any of the laws. They should not be allowed in the EU if they do not act with the laws. AB will settle but only when they are forced to do so and when many have spent every penny the have and more forcing them to settle. If the banks were listening why are they issuing writs against these victims and forcing them to take further legal action? They should clear these allegedly fraudulent debts and pay compensation to all their victims.

  20. I must disagree with anyone who believes this article is remotely accurate. It completely omits any suggestion of wrongdoing by the bank, and instead portrays it as a knight in shining armour.

    There is a wealth of alarming and damning evidence against the bank, and I believe it holds and equal role in this mess as the developer and the lawyers who represented them both.

  21. Has anyone ever known a bank to negotiate when it is in the right?

    The only time I’ve ever seen a bank compensate its victims is when someone has sued them, and that has set a precedent. Think, PPI insurance in the UK…

  22. A refreshing, candid and accurate appraisal which many commentators have been promoting for years.

    As much as it is a welcome statement I for one cannot but remain sceptical on what the final outcome will be. I fear a lot may depend on bailout talks with the troika as I am not totally certain that EU taxpayers will give their respective governments an easy time if it is felt that all the billions that may possibly be pumped into Cyprus only has the sole purpose of protecting the value of Russian Billions deposited there and to continue feeding the bloated public sector and its perks.

    If that proves to be the case then repossessions may start in earnest, we hope and pray that proves not to be the case and if most of the recommendations were adopted it would not take long for the country to climb out of the pit it has dug for itself.

  23. What this article fails to highlight is that Alpha Bank itself is allegedly responsible for countless breaches of European Directives, notably Directive 84/450/EEC concerning misleading advertising, its successor, Directive 2005/29/EC on unfair commercial practices, and Directive 93/13/EEC on unfair terms in consumer contracts to name only a few.

    There are clear examples of alleged breaches of these Directives, one need only look at the loan contracts to name but a few: the failure to notify investors that it had already encumbered the land, disbursing excessive loan amounts to developers too quickly with no proof of progress, depositing a loan contract that was not individually negotiated let alone seen or signed by the consumer, creating a contract heavily in favour of the bank, giving no right of the consumer to alter or cancel the contract, accepting no penalty clause for the bank for not fulfilling its obligations, drawing up an assignment of contract which essentially robs the consumer of essential rights of ownership… need I go on?

    Let’s also not forget that the bank may have breached its own code of conduct by failing to issue a European Standardised Information Sheet, or any other information to ensure its customers had all the information it required to make an informed decision.

    In my opinion, the only reason the bank is presenting its humble self to allegedly negotiate with its customers, is because of the threats of litigation against it.

  24. There was an awful lot of ifs mentioned. If the banks acted ethically if all the regulations were observed, and if the Dept. of Trade made sure the CCPS was something other than “the computer says no” organisation that seems to be unwilling to act in case it offends somebody in government.

    The biggest IF is if everybody (and there appears to be too many) did their job as it is meant to be done without fear or favour this country could pull itself out of the third world.

  25. The banks will settle that is a sure thing. My fear is that what they will settle for is not what many of the buyers will wish for. We settled with our bank when we sold our villa. They reduced the debt by quite a considerable amount but we still had to contribute an additional 50000€. Like I say settle they will but within reason. There will be no handing back the keys and walking away I suspect.

  26. At last, someone who tells it exactly as it is!

    Am I dreaming or did George Kounis just say what we’ve all been saying for years?

    The reference to Cyprus acting as if it is an Eastern Bazaar, is totally accurate, not only in the way the property market operates, but also in their dealings with the Troika.

    It’s time to decide, Cyprus, European Standards or Bazaar Standards?

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