Confidential figures from the Central Bank of Cyprus reveal that Cyprus continues to face a major private debt problem, with almost €20bn in non-performing loans (NPLs) still weighing on the economy despite years of banking reforms.
The data, prepared in October 2025 and obtained by Economy Today, was released amid growing political debate over private debt, foreclosures and protections for vulnerable borrowers. It provides a clearer picture of the scale of bad debt both inside and outside the banking system.
During Cyprus’ banking clean-up, loan portfolios worth €24.23bn were transferred off bank balance sheets. Of that amount, €16.702bn was moved to vulture funds, while €7.528bn was transferred to KEDIPES. In total, more than 219,000 loans changed hands.
A key revelation is that private credit firms bought €16.702bn worth of loans for just €3.223bn – around 19% of their original value – effectively acquiring them at an 80% discount. KEDIPES, by contrast, did not purchase the loans but took over their management.
Recoveries have improved but debt remains high
By 30 June 2025, total recoveries had reached €5.707bn, including €2.319bn linked to KEDIPES.
Private credit firms recovered:€3.597bn through cash repayments
€619m through auctions
€1.491bn through debt-for-property swaps
KEDIPES recovered:€1.613bn in cash repayments - €706m through auctions and property exchanges
Despite these recoveries, the remaining loan balance still stood at €19.703bn by mid-2025 — a reduction of €4.527bn from the original transferred amount, but still a substantial burden.
Most of the remaining loans are still distressed
Of the €19.703bn still held outside banks, €18.534bn (94%) remains non-performing, while 87% of those loans have already been terminated.
Within KEDIPES, 88% of its €5.762bn portfolio remains non-performing.
Meanwhile, banks have significantly improved their balance sheets. As of June 2025, bank-held NPLs had fallen to €1.455bn, representing just 5.6% of total lending portfolios.
However, when combining bad loans held by banks, KEDIPES and vulture funds, Cyprus’ total non-performing debt stood at €19.989bn.
The International Monetary Fund, Moody’s and S&P Global Ratings have all acknowledged progress in reducing bank risk but continue to warn that high private debt remains a major economic vulnerability.
According to Economy Today, around one in three Cypriots has a negative credit profile as either a borrower or guarantor, which raises concerns about mortgage access, property investment and long-term economic growth.
