ON THURSDAY the Cabinet approved four bills and draft regulations aimed at improving the legal framework to accelerate the reduction of non-performing loans (NPLs).
The parliamentary finance committee is scheduled to review the bills on Monday.
Finance Minister Harris Georgiades said after the meeting that the bills were drafted along the lines prescribed by the European Commission for giving its permission for the deal between the Hellenic Bank and the Cyprus Cooperative Bank earlier this week to go ahead – and he called on the House of Representatives to approve the bills and regulations before it begins its summer recess in mid-July.
Yiangos Demetriou of the Cyprus Central Bank warned that failure to conclude the agreement for the purchase of the Cyprus Cooperative Bank by the Hellenic Bank will have a catastrophic impact. He said that the alternative could be the resolution of the Cooperative Bank in a way that would put at risk even guaranteed deposits below €100,000.
The Minister referred to “gaps and weaknesses” in the current legal framework “which in turn cause excessive pressure by the European Central Bank on the Cypriot banking sector and eventually on borrowers and therefore we believe that there is an urgent need to improve this legal framework”.
Speaking to the press after the Cabinet, he noted that the suggested amendments will render the current legal framework “more effective, more functional and fairer”.
According to Georgiades, the amendments provide for faster procedures, while at the same time they expand the insolvency framework “to protect and facilitate those borrowers that need protection”.
“In the framework of the European Banking Union, in which the Cypriot banking system is now operating, promoting such amendments without delay is absolutely necessary to avoid risks that may arise should these gaps in the legislative framework remain” stressed the Minister.
Georgiades said that the European Central Bank warned that if measures were not taken another bank (which he did not name) may be in trouble.