Filenews 1 January 2021 - by Theano Thiopoulou
On 31 December 2020, the moratorium on instalment suspension was terminated and thousands of customers of banks and credit-backing companies that made use of the measure will have to start repaying their loans from January.
Already, in the previous months, gradual preparation had begun by the banks' branches, which saw one by one the files of their customers, to propose short- or long-term plans for a smooth return to the normality of the repayment of loans, but also for the overcoming of problems that may cause many borrowers to worsen their financial situation, due to the effects of the recession caused for months by the pandemic.
In cases where the bank considered or anticipated that it would be de facto difficult to pay the monthly instalment, they contacted the customer to find solutions, with the aim of avoiding the creation of a new generation of non-performing loans, as a result of the crown pandemic.
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The proposed plans of the banks, as mentioned by banking sources in "F", are cut and sewn into the current profile of each customer, whether it concerns a household or a business and for their development follow both the instructions of the domestic supervisor (Central Bank of Cyprus) and the European Central Bank. The effort to consult with borrowers will continue in the coming days and weeks, so that some customers who are judged to be truly and objectively unable to meet their obligations from today to propose, for a period of time, the payment of only the interest on their loans. If with the income they currently have they can fulfil this obligation and if they are subsequently found to be consistent, it is intended to grant them the alternative, under a private moratorium, to start after six months or a year or even after two years to repay their instalment normally.
Banks stress that they do not want to create social problems or suffocate their customers who are directly affected by the crown, as this will ultimately also affect the lenders themselves.
Hotel and focus
A big capital for the banks is hotels, with total lending close to €2 billion. The customers of banks in this category are very large hotels, medium but also smaller. Banks have long been in contact with entrepreneurs – hoteliers to examine the solutions that can be found for the gradual repayment of these loans. One of the solutions under consideration is: With the start of the next tourist season (which is estimated to be slightly better than in 2020), hotel companies will repay interest on their loans from June to October. Of course, all this is conditional on the situation in the tourism sector starting to normalise and also creating good prospects for the sector's progress in 2022. We recall that Deputy Tourism Minister Savvas Perdios has stated repeatedly in recent times that the return of Cypriot tourism to the performance of 2018 and 2019 may take three to four years.
Similar arrangements are expected to be made with both food entrepreneurs and entrepreneurs, their subject matter being interwoven with the tourism industry. This is a complex issue for the business world. In addition to loan payments, they will also have to fulfil obligations to their suppliers, some of which have been frozen for months. If, on the one one, they do not start repaying their instalments, non-performing loans will increase, but if they do not start paying off and paying their suppliers, liquidity problems will arise in the market, in addition to the problems of the smooth operation of the companies themselves.
Banking circles point out to "F" that an extension of the existing moratorium on instalment payments will not exist and the only way for everyone is to find solutions and make sustainable restructurings for those customers who will not be able to cope in the coming months. What is mentioned by the banking world is that those customers who have fixed incomes and do not fear dismissal, such as public and wider public sector workers, semi-state organisations, teachers, bank employees and staff at local authorities, will not be offered settlements.
