Cyprus Mail 19 November 2020 - by Cyprus News Agency
Cyprus is the worst performer when it comes to defaulted housing and consumer loan recovery times, according to data released by the European Banking Authority (EBA).
A study by the EBA on national loan recovery frameworks showed that the Cypriot system needs more than double the European average.
In Cyprus, it takes on average 6.4 years compared with 3.1 years in the EU. The net value of the recovered loan is the fourth lowest in the EU at 28.2 per cent of the loan’s value against 43.9 per cent European average.
“Higher time to recovery results in a lower recovery rate, reflecting poor enforcement/insolvency procedures,” the EBA said.
The EBA defines the recovery period as the time from the official commencement of procedures until full recovery.
The net recovered amount represents whatever is left after deducting all expenses relating to the recovery process.
Average recovery time relating to commercial properties in Cyprus is 2.1 years, which is half the European average of 4.1 years. The net recovery value 23.3 per cent on average versus 38.4 per cent in Europe.
As regards recovery of loans relating to small and medium businesses, it takes 4.1 years in Cyprus against the European average of 3.3 years, the fifth worse performance after Italy, Ireland, Malta, and Czechia.
The long period needed to recover business loans in Cyprus could be related to the fact that many have a primary residence as collateral.
The net recovered amount in SME loans is 23.7 per cent compared with 31.5 per cent in Europe.
Things are better when it comes to big businesses, with Cyprus needing 2.2 years against the European average of 3.4.
Credit cards are a different matter, with 3.3 years needed on average whereas European banks collect in 2.3.
Cyprus’ performance is even worse as regards consumer loans, needing 7.1 years on average compared with 3.7. However, the net recovery rate is 50 per cent against 32.9 per cent in Europe.
