Borrowers’ group says banks piling on the pressure

The chairman of a borrowers’ protection group said that banks were piling on the pressure on non-paying customers in recent days after the parliament modernised the foreclosure and insolvency framework.

One borrower with an outstanding amount of €14,000 and payments totalling €1,600 in arrears received a verbal “threat” from Altamira, a Spanish distressed asset specialist which entered a partnership with the Cyprus Cooperative Bank a year ago, that the Co-op would resort to foreclosing his collateralised property, Costas Melas, chairman of Syprodat, as the group is known, said in an interview with state radio CyBC on Friday.

“Their handling is unbelievable,” he said adding that the borrower had been told that unless he settled his debt, the bank would proceed to foreclosing his property in August. The value of the collateral was in the range of €200,000 to €300,000.

“You should behold their misery,” he said.

The modernised legislation, passed by parliament on July 8 to allow the European Commission to approve the asset transfer agreement between Hellenic Bank and the state-owned Co-op, the first post-crisis casualty of banks being unable to tackle their bad loans, should help banks go after strategic defaulters, Melas said.

The chairman of the group added that Syprodat intended to report the case to the Central Bank of Cyprus and to the attorney-general’s office.

Melas said that letters of “type theta and iota” which tell borrowers they are in arrears and to prepare the ground for a foreclosure at a later state, have been sent by banks to customers on a large scale in recent days.

Cypriot banks are struggling with a 43 per cent non-performing loans ratio, or almost €20 billion, which was partly blamed on weak lending standards in the past and partly on the lack of an effective foreclosure and insolvency framework, which allowed borrowers to exploit a Cypriot justice system known for dragging its feet.

Melas said that the new legislation may be challenged at the Supreme Court on the grounds that its retroactive effect is in conflict with the constitution.

None of the Cypriot banks contacted by the Cyprus Mail responded to a request for comment.