Re­pos bill ‘al­most ready’, as Troika talks near end

Financial Mirror (Cyprus) - - FRONT PAGE -

The At­tor­ney Gen­eral’s of­fice re­ceived the fi­nal draft of the re­pos­ses­sions bill late on Tues­day, which means that the leg­is­la­tion which is be­ing de­manded by the Troika of in­ter­na­tional lenders in or­der to help re­lieve banks from non­per­form­ing loans (NPLs), will not make it to the Cab­i­net in time.

But the bill has to be passed in or­der for the fifth re­view of the bailout agree­ment to be con­cluded.

Pas­sage of the bill will also pave the way for the Troika to re­lease the next tranche of its bailout for Cyprus, of the to­tal 10 bln when one bank was shut down and all its trou­bles passed on to an­other as part of the March 2013 de­posits-fore­quity “bail in” of savers’ money.

The bill on fore­clo­sures and pri­vate auc­tions of mort­gaged prop­er­ties was fi­nalised af­ter dis­agree­ments with the Troika mis­sion who are ex­pected to con­clude their re­view of Cyprus’ eco­nomic ad­just­ment pro­gramme by Fri­day, July 25.

Dis­cus­sions be­tween the au­thor­i­ties and Cyprus’ lenders are fo­cus­ing on strik­ing the right bal­ance be­tween the rights of the bor­rower and the lenders.

The sticky is­sue of the dis­cus­sions is the right of the bor­rower to dis­pute the auc­tion and con­test the price of the mort­gaged property.

The text was sup­posed to have been sub­mit­ted to the Coun­cil of Min­is­ters on Wed­nes­day for ap­proval and then sub­mit­ted to the House of Rep­re­sen­ta­tives, while time should be given to the Law Of­fice of the Repub­lic for le­gal vet­ting.

The is­sue of fore­clo­sures is be­lieved to be the most im­por­tant sub­ject of the cur­rent re­view as the new frame­work pro­vid­ing for fore­clo­sures and pri­vate auc­tions should have been im­ple­mented by June.

Based on the Me­moradum of Un­der­stand­ing agreed with the Troika, pri­mary res­i­dences are ex­empt from fore­clo­sures un­til the en­try into force of the le­gal frame­work gov­ern­ing cor­po­rate and per­sonal in­sol­vency pro­ce­dure in the com­ing De­cem­ber.

The meet­ing be­tween the Fi­nance Min­is­ter, Cen­tral Bank Gover­nor Chrys­talla Ge­orghadji and the Troika heads of Mis­sion over the agree­ment on the fifth up­dated MOU is sched­uled for Thurs­day, mark­ing the con­clu­sion of the fifth re­view.

The Troika of­fi­cials are press­ing for ex­pe­dit­ing fore­clo­sures as they be­lieve that this would en­cour­age bor­row­ers to re­pay their loans or agree to re­struc­ture their loans.

Debt re­struc­tur­ing is a key el­e­ment of the Cypriot bailout pro­gramme, as NPLs (loans in ar­rears over 90 days) in the bank­ing sec­tor have reached EUR 27 bln, or about 45% of all loan books in the commercial and Co­op­er­a­tive bank­ing sec­tors.

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