WITH JUST 35 days to go before the time limit to apply for protection under the Estia debt relief scheme for distressed borrowers expires, the Bank of Cyprus says it will repossess properties whose owners do not apply for protection under the scheme.
According to the Bank, it has received a mere 487 Estia applications representing total of €120 million non-performing loans (NPLs); the Bank estimates it has 2,500 eligible property owners whose total debt amounts to €830 million.
Other banks have said they’ve also received a very small number of applications. This unexpected development led the government extend the time limit for applications to the end of the year.
Lawmakers consider the low number of applications is probably due to the complexity of the application process. Applicants must fill 30 pages with family income and property details and at the same time append 40 to 50 different types of documentation, which requires a great deal of time and effort.
But there are others, known as ‘strategic defaulters’; those who have the economic means to pay but refuse to do so and fall outside the scope of the Estia scheme. It is believed these strategic defaulters are wary of disclosing information about other assets or income, which might lead to capital or tax audits.
In other developments BoC posted a profit of €116 million in first nine months 2019 and said NPLs had dropped significantly following the sale of €2.7 billion (project Helix) to currently stand at €4.1 billion. Since the peak in 2014, that bank has reduced its stock of NPLs by 73%.
The Bank plans to close a further 11 branches following the closure of 26 branches since the beginning of 2018, reducing the branch numbers by 57% since the end of the end of 2013.
In October, the Bank completed a voluntary staff exit plan through which 470 applicants were approved to leave at a total one-off cost of €79 million, reducing the number of employees by 11%. The move is expected to achieve gross annual savings of €28 million or 13% of staff costs.