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Banks to offload €4 billion NPLs

The Bank of Cyprus and the Hellenic Bank will sell non-performing loans (NPLs) worth €4 billion by the end of February enabling them to dispose of more than 10% of their problematic loans.

Banks to offload €4 billion NPLs The island’s two largest lenders, the Bank of Cyprus and the Hellenic Bank, will sell bad loans worth €4 billion in total as the banking system tries to purge itself of toxic debt, Central Bank of Cyprus governor Constantinos Herodotou said.

Herodotou has briefed the House Financial and Budgetary Affairs Committee, noting that the amount of non-performing loans (NPLs) have not changed much during the last few months.

He pointed to two major milestones, by the island’s two largest banks to sell loans from their portfolio.

The sale is expected by the end of February for the Bank of Cyprus, while Herodotou said he was unaware about the date for Hellenic Bank.

He said both banks are expected to sell NPLs worth €4 billion in total, allowing them to dispose more than 10% of their problematic loans and concentrate on operational matters.

Latest data shows that bad loans in the banking system are 29.3% of the total.

Moreover, the final position of the European Central Bank (ECB) regarding a complaint handling mechanism on foreclosures, prepared by the CBC, is expected in late February.

Herodotou told the House Committee that deliberations with the ECB started on December 6, with the CBC sending a detailed description of the mechanism.

After receiving the relevant draft bill, the ECB sent an unofficial document with its initial thoughts.

The CBC governor said the ECB agrees in general with the mechanism’s modus operandi. Consultation on two issues is pending between the CBC and the Finance Ministry, which is scheduled to take place next week.

After the consultation is complete, the draft bill will be sent back to the ECB at around February 6-7, and a reply is expected by February 20-21.

Herodotou said that the plan aims to help banks avoid being adversely hit, while people will be able to seek redress.

Readers' comments

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  • Lost Faith in Justice says:

    There is a PDF you can download for info on European Enforcement Order (including defence of one).

    There is no ex officio examination of unfair terms in Cyprus (which established EU Case Law says there should be), and there are unfair terms in ALL standard bank contracts. If you are a consumer and the court did not examine your contract for unfair terms then you may have a defence, including breach of the Charter of Fundamental Human Rights because you did not get a fair hearing. I am not a lawyer, so you need to check this out.

    Also, if the Bank did not prove its debt properly in the court you may have a further defence. If formal demand was made pre 2015 the court is supposed to get the Bank to justify the amount it is claiming. I don’t think this is happening.

    You need to act quickly after the order is issued, and your chances may be slim but it has to be worth a try.

    There is so much illegality in these contracts, including documents / contractual terms that were hidden from buyers pre-contract (and subsequently), it may be worth British buyers of missold property reporting the scams to the serious fraud office in the UK. These matters have been discussed extensively in the European Parliament and in the Uk Parliament in a cross parliamentary committee headed up by Sir William Cash. Sir David Liddington has also been involved, and numerous cross party MPs. It’s all online. There have been numerous cases settled out of court in the UK, and there are court records of successful cases which is further evidence. This is a massive fraud which deliberately targeted and exploited British people in the UK to which at least three Parliaments – the UK Parliament, the Cypriot Parliament and the European Parliament are turning a blind eye.

    If we can’t rely on the justice of the courts, perhaps victims who believe they have been defrauded (and have the evidence to prove it) should report it to the UK police because this is a multi-billion pound trick which is continuing to destroy lives and steal British property. Who knows, getting a crime report and a number may help you defend an order and enough people report it, perhaps the British Government will do something more than talk about it. The CCPS said it was possible for the UK equivalent to take out a cross border injuction on behalf of the British victims against the use of the unfair terms / contracts / unfair commercial practices and it was a practice used by the OFT before it was closed down. It is expensive.

    I am sure it would be something that victims of property mis-selling in Cyprus would prefer to crowd fund, rather than the bonging of Big Ben on the 31st January. I’d certainly contribute.

  • Still looking says:

    Hi Can they still pursue these non payments once UK leaves the EU?

    Ed: Yes, but depending on Brexit negotiations they may be unable to apply for an EU Enforcement Order.

  • Lost Faith in Justice says:

    All of these NPLs are likely to contain unfair terms which are standard fare in Cyprus. Established EU case law says there’s no statute of limitations on unfair terms – so they are unfair at the signing of the contract and they are unfair when they are handed off to subsequent acquirers (regardless of Cyprus Law which is subordinate to EU law and they remain unfair to the end of the contract). It’s called novation and you can’t lose your rights. In theory, you cannot be bound by unfair terms if you are a consumer.

    You must flag consumer abuse issues to the European Commission. You can complain via their website. If there are enough complaints, the EU Commission should take action.

    DO NOT SUBMIT TO CYPRUS JURISDICTION. If you are a consumer (even small scale buy to let property) they have to pursue you in your country of domicile and you can complain to the UK Financial Ombudsman as long as they are behaving badly in the UK. There are debt collectors currently behaving badly in the UK (on behalf of the Banks in Cyprus). You won’t get anywhere if you complain about a foreign bank (or a foreign solicitor) in a different country to the UK authorities. You can try the Financial Ombudsman in Cyprus but there is a cap on the loan amount and I didn’t find the process fair or transparent. Unfortunately none of the competent authorities in Cyprus have any legal clout (by design).

    Get informed. Know your rights. There is lots of information free online (including on this site). The law could be on your side – but not in Cyprus. If you are going to fight, make sure it is not in Cyprus and before you appoint a legal adviser trawl the internet to make sure its a good law firm. There are plenty of bad ones to choose from (in the UK and Cyprus and some have a foot in both camps) but a search on the internet will quickly unearth the lawyers you want to avoid at all costs. If you read bad things, or get bad vibes, steer clear. The bad lawyers will make your life a misery and give you further heartache. If you find a bad Cypriot lawyer the Cyprus Bar Association will not address your complaints. Get a recommendation for a good lawyer if you can.

    The reality is that you are unlikely to recover your original investment or anything else you have invested. If you win a case in Cyprus it is highly unlikely your damages / costs will be paid. The objective must be to cap and cut your losses. It is likely you will have to pay back anything you have borrowed and your property won’t be worth what you paid for it.

    You can negotiate a debt-equity settlement and the Banks are increasingly agreeing to that but in my experience, the process is not transparent or fair. There are thousands of victims of property and loan misselling (including Cypriots) but we must not behave like victims. Start reading up on your rights, and make a plan. Work in small groups if it makes it cheaper, but only small ones. Big groups will slow the final resolution down. It is likely you will need legal assistance and it will be expensive, but if you want closure, that’s what you need to do. If you are stuck in the court system in Cyprus you are going to languish there for many years, so take some action and try and get out by other means. It’s really ugly; it’s painful and justice is elusive but don’t let it kill you. You are not alone and you are not stupid, although you are being made to feel that way. We’re victims of a massive conspiracy but we are beginning to break the chains of oppression and we should all try and do what we can to take back control (and share our best practice and recommendations). Good luck.

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

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