Next July, the request to the General Directorate of Competition for the transformation of KEDIPES into an asset management agency and the implementation of the mortgage-against-rent plan is expected to be officially submitted.to-rent), a Finance Ministry official said, stressing that the government is working on the eligibility issues so that the new plan to protect the first home and commercial housing will not have the same effects as the ESTI plan.
Speaking before the Parliamentary Finance Committee, Anthi Chrysostomou Lapathiotis, Director of the Financial Stability Directorate at the Ministry of Finance, did not give specific details since the issue is being processed by a specific external consultant in order to complete the plan to the General Directorate of Competition.
Today's meeting of the Committee examined the issue of the transformation of KEDIPES into a national asset management body, as well as the procedures it follows with regard to the provision of restructuring solutions to borrowers.
The operation of KEDIPES in 2018 was approved by DG Competition on the basis of specific commitments, as it concerned the granting of state guarantees in the context of the process of transferring the servicing portfolio of the former Cyprus Cooperative Bank to Hellenic Bank.
"Perhaps the plan will be submitted to DG Competition by July 2022 and the European Commission will respond to us accordingly," Ms Lapathiotis said, adding that the Ministry has frequent contacts with DG Competition regarding the parameters of the plan in order to make its approval easier. Lapathiotis said that the plan will be based on previous plans, such as the ESTIA and will concern main residences and commercial housing up to a value of €350,000, and noted that the eligibility criteria are currently being worked on.
"Some income criteria need to be set in the scheme to ensure that there is a real need for a borrower to participate in the scheme, as it must be social in nature," he explained, noting that the scheme would be for cooperative borrowers.
"However, we will look at the asset component to not have the same parameters as the ESTI to not have the same results as the ESTI. So, yes, income criteria and we'll see if there will be what in property criteria for inclusion in the plan," she added.
Lapathiotis said that there will be a fiscal impact, which "will depend on the size of the portfolio and the specific characteristics of the project, but probably the impact will be on the amount paid by KEDIPES to acquire the portfolio and also the rent paid to the vulnerable."
"For vulnerable borrowers, the rent will be paid by the government," he added.
He also noted that this new plan might lead to a suspension "for two or three years of the payment (for repayment of government assistance) made to the government."
He recalled that the government has already implemented three plans for first home protection. These are the ESTIA plan, the plan for terminated loans of the Equal Burden Sharing Agency for Refugees, and OIKIA, which has the same criteria as ESTIA and involves loans with government money or the property was on government land.
KEDIPES: Straddling the line between vulnerable and defaulters
Moreover, speaking at the session, KEDIPES President Lambros Papadopoulos said that since its launch in September 2018, KEDIPES has achieved a total of €2.8 billion in solutions, of which restructuring was €1.1 billion, received in cash inflows of €1.2 billion, while the state aid repaid in cash amounts to €570 million; €140 million in real estate, while €250 million in liabilities of the former SCT, namely the asset protection plan granted to Hellenic and for the voluntary departure plan, have been paid, and €70 million have been paid in taxes; moreover, according to a note filed by KEDIPES, loan write-offs since the start of KEDIPES' operations amounted to €1.1 billion.
"If we add them all together we have given over €1 billion to the state," he said, adding that in the first six months KEDIPES did not have a credit management company licence and there was the coronavirus pandemic.
"We always try to achieve sustainable restructuring, that's our goal, we try to protect vulnerable groups, but we also have strategic defaulters on the side. We are straddling the line between the two, we are doing our best to bring the best outcome and fulfill our mission, which is full repayment of state aid," he said.
He however noted that full repayment is based on legislative frameworks, rule directives, adding that any changes in the institutional framework will affect our ability to repay state aid in full.
In addition, KEDIPES Director General Marios Papadopoulos told the committee that KEDIPES does not proceed with divestments of primary residences with a value below €350,000.
The meeting also discussed for the umpteenth time an amendment bill to the law on the purchase and sale of credit facilities, which sets the framework for the licensing and supervision of credit management companies, while giving these companies access to the Ariadni system and Land Registry data. The approval of the bill is also among the preconditions for the disbursement of the first tranche of €85 million from the National Recovery and Resilience Plan funds.
A central bank spokesman said that under the bill, management companies will have exactly the same rights and obligations as unlicensed credit institutions for managing arrears. He noted that after the law is passed, the CBC will issue the three CBC guidelines on arrears management to apply to management companies.
He also said that apart from Altamira, the other credit management companies are companies under banking groups rather than individual credit management service providers (third-party providers).
At the same time, the Financial Commissioner said that huge delays have been caused due to fearlessness in the implementation of the law by the companies.
On behalf of Gordian, the company's managing director Anthea Exadaktylou rejected a position that credit buyout companies are claiming the full amount of the loan from borrowers.
She said 70% of solutions for resolving NPLs are consensual, and highlighted the effectiveness of the framework for divestments, saying that most consensual solutions are found and agreed upon after the first auction takes place. He noted that only 2 per cent of debts were recovered from guarantors and that these were cases "where there is clearly wealth behind the loans that we are coming to settle."
He noted that due to the absence of access to a borrower's information, write-offs are made after the borrower receives an affidavit of assets.
Panikos Mouzouris, of Themis Portfolio Management,
said that the agreement made with the Bank of Cyprus explicitly provided that loans falling under the ESTI are not transferred and added that if by mistake they have been transferred, the company examines them on the basis of the provisions of the plan and on the basis of the agreement with the Ministry of Finance.
In statements after the session, DIKO parliamentary spokesman Panicos Leonidou said that DIKO has pointed out its serious objections on issues related to the operation of this bill. "Based on this bill, further powers are given to banks, i.e. all the rights that banks have are transferred without showing or reflecting any rights of borrowers, it is therefore a heterogeneous piece of legislation and therefore we are discussing to enrich it with further rights of borrowers," he added.
The
PPP MP Alekos Tryfonidis[/B] denounced "in the most obvious way the way these companies operate and their behaviour towards borrowers."
"We publicly denounce these companies because while they have bought back the loan with an alpha amount with various excuses and charges, the loan is doubled and then they ask the borrower for the full amount," he said.
Source: CNA
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