By George Psyllides CYPRUS' international lenders believe the rise in non performing loans (NPLs) was not justified by the economic developments on the island and are considering bringing forward the timeframe regarding reforms to the foreclosure and insolvency framework in a bid to contain strategic defaults. Citing Troika sources, the Cyprus News Agency said lenders believe the increase in NPLs was not justified by the macroeconomic and fiscal developments on the island. They attribute the rise in NPLs to the current framework covering the seizure of properties pledged as collateral, and the personal and corporate insolvency, which allow borrowers to strategically opt not to service their loans. Under the current framework a bank may need up to 20 years to seize assets pledged as collateral. "We are considering a change in the time frames and front-loading the reforms, if this is possible," a Troika source told CNA. The framework reforms will enable banks to pressure borrowers to service their loans, alleviating the acute liquidity problem currently observed in the banking sector. Cyprus received a €10 billion bailout from the Troika March last year after agreeing to close one bank and seize part of deposits over €100,000 to recapitalise another. NPLs soared above €26 billion, as the contraction of the economy in 2013 reached 5.4 per cent of GDP compared with initial projections of an 8.7 per cent contraction. The Troika mission is currently conducting the fourth review of the financial adjustment programme. The delegation met lawyers and accountants on Tuesday to discuss anti-money laundering issues. The island's supposedly poor anti-money laundering record was used as an argument against Cyprus in the run up to the bailout. Chairman of the Institute of Certified Public Accountants of Cyprus (ICPAC) described the way Cyprus was portrayed as exaggerated. "It seems, and this is the information we have, that so far our results are very satisfactory, something which I think shows in the country's general assessment," ICPAC general manager Kyriacos Iordanou said. "We think the attack launched last year was excessive and we want to believe nothing different happens in Cyprus than any other country in the EU." Meanwhile, troika officials have asked the government to abide by the set timetables for the privatisation of semi-government organisations (SGOs). Sources told CNA that while the government has expressed concern on whether is possible to collect €1.8b from privatisations by 2018, the Troika believes the task is achievable, as besides the privatisation of the Cyprus Telecommunications Authority, the Ports Authority, the Electricity Authority, the Stock Exchange, the Pancyprian Company of Bakers and the Forestry Industries, revenues will flow in also from casinos licensing and utilisation of state property. Meanwhile the government is considering selling the National Lottery to a strategic investor. Government sources have said that revenue from the National Lottery amounts to €20m annually.
Send to Kindle