The Approval of a Bill relating to the Sale of Loans
A bill under the name “Lawregulating the activities of portfolio investor companies of 2015”, has been drafted by the Central Bank of Cyprus and is set for approval by the Parliament by the end of September 2015. Cyprus will need to implement this law before a €500 million bailout tranche is released.
The main aim of the said Bill is for banks to absolve themselves of distressed loans and seeks toensure that rights of borrowers and mortgage holders of distressed loans will be transferred to new investors. The Bill makes a clear distinction between loans under €1 million which represent 96% of loans in the banking system of Cyprus and those with amounts of over €1 million.
The cornerstones of the Bill are the following:
(i) Loans of up to €1 million will be subject to strict regulations namely that those buying the loans must be resident in Cyprus, or subsidiaries of credit institutions in other EU member states.
(ii) Non-credit institutions, such as debt-buying firms, may also qualify to buy loans as long as they are handpicked by the state and obtain a license by the Central Bank.
(iii) Loans exceeding €1 million will be subject to the criteria whether borrower rights will transfer over to the new loan.
For further information on this topic please contact
Ms. Nada Starovlah (email@example.com) at SOTERIS PITTAS & CO LLC,
by telephone (+357 25 028460) or by fax (+357 25 028461)