Central bank says banks again mostly failed NPL targets

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By Stelios Orphanides

While Cypriot banks proposed more restructuring solutions to borrowers in the second quarter of 2017 than expected by the supervisor in an attempt to reduce their delinquent loans, they failed expectations in all three remaining areas, the Central Bank of Cyprus said.

Banks presented their customers with proposals to restructure 21.08 per cent of their non-performing loans, against a target of 14.73 per cent of proposed sustainable solutions, the central bank said in a statement on its website on Wednesday.

The bank supervisor, which is already reconsidering the set of performance indicators as “the main purpose for which they had been set, is no longer fulfilled,” said that the percentage of sustainable solutions concluded was only 10.42 per cent, compared with a target of 15.13 per cent, “presenting a significant underperformance”.

Cypriot lenders were also unsuccessful in maintaining the share of restructured loans in arrears of less than eight days above 71.91 per cent, the central bank said. They did so only with 68.21 per cent.

They underperformed the most in the category of loans that presented arrears of 31 to 90 days at the beginning of the second quarter and at the end of it showed no arrears, it added. The target was 43.78 per cent, but actual realisation was 25.55 per cent.

The set of targets, introduced in 2015, aimed at helping banks step up their efforts to reduce their non-performing loans stock, currently around €22bn or 45 per cent of their portfolio. Three months ago, the central bank said that it would revise the benchmark indicators.

“The new framework will be implemented within 2018,” it said. “To this end, this is the last publication with the existing targets”.

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About Author

Stelios Orphanides is a journalist at CyprusBusinessMail.com. To contact Stelios Orphanides: [email protected]

  • almostbroke

    Did you expect any different with the Bank unions dictating policy !

  • Roger Thecabinboy

    the NPL issue is not over, merely defered.

  • Philippos

    This is a complete nonsense. You cannot “Target” this kind of activity because all it does is encourage fudging and it will boomerang back. Take the time it needs, do it once, do it right – That is the mantra for NPL Resolution, No, ifs buts or maybes, or stupid “Government “Targets””

  • Kevin Ingham

    With inadequate foreclosure law restructuring means absolutely nothing . You can pay a nominal sum to keep the bank off your back for a few years then simply revert to not paying.

    Without the legal teeth to wind businesses up or repossess houses then the outstanding amounts will never come down – they are simply reclassified for no more than political purposes whilst the economy continues to decline because the banks cannot afford take risk investing in innovation and improvement for viable or new businesses

    However, no one is in any hurry to change the laws to enable the banks to get their money back- the impact on property prices and unemployment of proper foreclosure procedures would put the country back into recession