Memorandum of Welfare helps with non-performing loans
The memorandum welfare for the packaging and sale of loans will be a tool for third parties to deal with the large amount of non-performing loans.
This specific welfare of the memorandum, which Sigma discovered some time ago, will be a key to lenders as a prerequisite to the next evaluation in July.
The image of the non-performing loans that was recorded in economic results for the first three months of 2015 is as follows:
- Bank of Cyprus: 63% or €15.2 billion
- Hellenic Bank: 59.5% or €2.7 billion
- Co-Operative Bank: 57,4% or €6.9 billion
Analysts and Creditors are paying special attention to the rate of non-performing loans with bad debts. Banks hold that the amounts that haven’t been seen as bad debts can be mortgaged.
The value of mortgages plays an important role in this equation. The indications for the first three months of the year were:
Amount of Coverage of Non-Performing Loans
- Bank of Cyprus: 25%
- Hellenic Bank: 47%
- Co-operative Bank: 44,1%
A question arising from this is, how borrowers will be affected by the sale of their loans to third parties. In the majority of sales the bank says that through an agreement it will handle the loan file and the borrowers for the benefit of the investors.
A law voted on in the House on divestitures, said that: “Borrowers, in the case of a sale of their loan, will be entitled to all his/her rights, such as restructuring of his/her loan or contact of an ombudsman.”