CBC pre­pares draft law on sale of loans and se­cu­ri­ti­sa­tion

Financial Mirror (Cyprus) - - FRONT PAGE -

A Cen­tral Bank draft law on loan sales pro­vides that loans could only be sold to com­pa­nies res­i­dent in Cyprus, in ad­di­tion to sub­sidiaries of credit in­sti­tu­tions in other EU mem­ber states.

This set­tles the con­cerns by in­vestors and politi­cians alike that mort­gaged Cyprus prop­er­ties that have de­faulted may end up in for­eign hands, par­tic­u­larly Turkey.

The CBC may also in­ter­vene in the rate of dis­pos­als of im­mov­able prop­er­ties to safe­guard the fi­nan­cial sta­bil­ity in the Repub­lic, the frat law says, and to check in de­tail the nat­u­ral and legal per­sons hid­den be­hind the credit ac­quir­ing com­pa­nies.

At the same time, the Cen­tral Bank pre­pared a sec­ond draft law on loan se­cu­ri­ti­sa­tion.

The two bills, ac­cord­ing to the Cyprus News Agency, are dis­cussed in a Task Force es­tab­lished un­der the CBC, with the par­tic­i­pa­tion of rep­re­sen­ta­tives of com­mer­cial banks, the Banks As­so­ci­a­tion and Cer­ti­fied Public Ac­coun­tants of Cyprus (ICPAC), the Bar As­so­ci­a­tion Bor­rower As­so­ci­a­tion.

Among other is­sues, they ex­am­ine the ob­sta­cles to the trans­fer of in­di­vid­ual loans or loan port­fo­lios to third par­ties, which may arise from the loan con­tracts, col­lat­eral agree­ments and ex­ist­ing leg­is­la­tion.

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The adop­tion of the two bills by the Cabi­net by the end of June is a prior ac­tion re­quested by the Troika of in­ter­na­tional lenders. Un­der the fifth up­date of the Mem­o­ran­dum, the Cypriot au­thor­i­ties should re­move any ob­sta­cles to the trans­fer of loans to third par­ties, while the con­sent of the bor­rower should not be re­quired, as it is the case to­day.

Ac­cord­ing to the draft law, all loans, per­form­ing and non - per­form­ing could be sold.

It also stip­u­lates that a com­pany which in­tends to en­gage in credit ac­qui­si­tion may ap­ply to the Cen­tral Bank by pre­sent­ing the iden­tity of its share­hold­ers, whether di­rect or in­di­rect, nat­u­ral or legal per­sons, who have qual­i­fy­ing hold­ings and the amount of this hold­ing or, if there are no qual­i­fy­ing hold­ings, the iden­tity of the 20 largest share­hold­ers.

Un­der the third part of the pro­posed law (su­per­vi­sory pow­ers and re­quire­ments), the Cen­tral Bank may in­ter­vene in the rate of dis­pos­als of im­mov­able prop­er­ties, by is­su­ing gen­eral or spe­cific di­rec­tives or guide­lines.

A sec­ond bill called “The se­cu­ri­ti­sa­tion law,” al­lows the cre­ation of an or­gan­i­sa­tion, in which the banks as­sign or sell their loans and the or­gan­i­sa­tion is­sues ei­ther shares or bonds to se­cure the loans granted.

The guar­an­tor un­der the pro­posed law can be ei­ther a per­son, in­clud­ing the gov­ern­ment, or any public author­ity.

Mean­while, par­lia­ment has ap­proved the reg­u­la­tions on auc­tions, paving the way to bank­ing in­sti­tu­tions to con­clude fore­clo­sures pro­ceed­ings.

Dur­ing their regular ses­sion Thurs­day, 33 MPs voted in favour of reg­u­la­tions, while 21 voted against.

Bank­ing in­sti­tu­tions in Cyprus may now ac­ti­vate fore­clo­sures pro­ceed­ings, a cru­cial re­quire­ment of the is­land’s 10 bln euro bailout pro­gramme. last the

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