Massive foreclosures is not the goal, bankers say

Massive foreclosures is not the goal, bankers say

The law on foreclosures of mortgaged immovable properties, passed recently by the House of Representatives, will contribute to the return of clients to the negotiating table, high ranking bank officials in Cyprus have said, noting that massive foreclosures processes are not the purpose of the law.

Chief Executive Officer of the Hellenic Bank, Bert Pijls, Director of Restructuring and Recoveries at the Bank of Cyprus, Evan Hamilton, and General Manager of the Cooperative Central Bank, Marios Clerides, were the main speakers at a round table discussion organized on Tuesday by the Institute of Young Scientists on the business plans of Cypriot banks after the implementation of the foreclosures law and the insolvency framework. The event was also addressed by Chairman of the House Committee on Finances and President of the opposition Democratic Party, Nicolas Papadopoulos.

Chief Executive Officer of the Hellenic Bank Bert Pijls said that the main purpose of the law on foreclosures is to bring clients back to the negotiating table in order to restructure their loans. If clients remain uncooperative, he added, then the bank will pursue the law further, which is there to be implemented, but it is `there to be implemented with care`, taking into account that the bank also has a `social responsibility`.

In order for Cyprus to move on, he said, we need to address Non Performing Loans and he said we must attract more foreign investors, noting that tourism is a good form of investment.

On behalf of the Bank of Cyprus, Director of Restructuring and Recoveries Evan Hamilton said that it is of great importance to solve the problem of Non Performing Loans.  Referring to the foreclosures law he said that massive numbers of foreclosures is not an issue on the menu but it constitutes a tool in order to continue the negotiation with those who owe the bank.

He described the law on foreclosures and the insolvency framework passed by the House of Representatives as a good step towards the normalisation of Cyprus` banking system. Hamilton also talked about the need to attract foreign investments.

Marios Clerides, General Manager of the Co-operative Central Bank said that the challenges for the Co-operatives have to do with the balance that needs to be found between two important aspects.

The first, he said, is the fact that the Cooperatives are handling taxpayers` money – since they are state aided – and the second is that it is a social movement which has to be gentle to its clients.

Chairman of the House Committee on Finances, Nicolas Papadopoulos, said that the Non Performing Loans in Cyprus constitute the highest rate in the world history of banks and noted that this is mainly due to the fact that in Cyprus a bail-in solution was imposed which was implemented for the first time in the world and which made things worse. He expressed the view that after the haircut on bank deposits banks must begin examining a haircut on loans. He also said he was in favor of the creation of a `bad bank` so that banks can offer liquidity to the economy.

Papadopoulos also said that Cyprus must ask for EU assistance for the solidarity it showed as regards Greece and for the bail-in solution imposed on the island. `We have to ask our stolen money back` he said, noting that this is an important aspect in the efforts to save the Cypriot economy.

Excluded from the international capital markets since May 2011, Cyprus applied for a bailout in June 2012 to avert the collapse of its banking sector and cover its financing needs. The €10 billion bailout agreed in March 2013 with Cyprus` international lenders known as the Troika (European Commission, European Central Bank and International Monetary Fund) featured the unprecedented bail-in of uninsured deposits coupled with capital controls which plunged the economy into deep recession.

The Cypriot economy returned to growth in the first quarter of 2015 with 0.4% after a 14-quarter contraction.