Cyprus

It is unlikely that the fifth and final bill completing the insolvency framework – a set of laws offering protection to distressed borrowers – will be forwarded to the House plenum by March 19, when the suspension of tougher foreclosure legislation expires, House Finance committee chairman Nicolas Papadopoulos said on Wednesday, Cyprus Mail reported. Committee-level discussion of the fifth bill, which relates to the insolvency of natural persons, started in the morning in a joint session by the Finance and Interior committees.

Despite the critical breakthrough made on foreclosures legislation on Friday, when the cabinet approved the fifth and final bill comprising the insolvency framework, Finance Minister Harris Georgiades’ optimism that both bills will be voted by the House may yet prove misplaced, the Cyprus Mail reported. Opposition parties on Monday continued to voice reservations – or outright rejection – with regard to their provisions.

The guarantor’s obligation to repay any amount outstanding after considering the value of any collateral posted by borrowers is included in the fifth and final insolvency bill, which was approved by the cabinet on Friday, Cyprus Mail reported. The set of laws is designed to protect insolvent borrowers.

The four of five bills comprising the insolvency framework will not be tabled to the House Plenary today, as the Budgetary and Interior Committees could not conclude the discussion of the four bills, Chairman of the Budgetary Affairs Committee Nicolas Papadopoulos has said, the Famagusta Gazette reported.

The government is optimistic that the troika of lenders will in the next few days give the nod to the fifth and last bill of the insolvency framework, finance minister Harris Georgiades told MPs on Monday, Cyprus Mail reported. The bill in question regulates which mortgaged primary homes are exempted, under certain conditions, from repossession, as well as the thorny issue of guarantors to bad loans. “Progress has been made in terms of the consultations and clarifications requested [by the troika], which we have given to them,” Georgiades said.

Cyprus’ international creditors appear to have red-flagged a provision linking guarantors’ obligations to those of the borrower, meaning they should be let off the hook if the borrower has declared bankruptcy, and that their obligations should be reduced in line with concessions made to the borrower. But the Troika delegates, in town to discuss the progress made on the country’s economic adjustment programme, appeared resolute that guarantors’ obligations should remain unaffected by any settlement the bank may agree with borrowers.

The Cabinet yesterday gave the nod to the fourth of five government bills comprising a package of bankruptcy-related legislation, The Cyprus Mail reported. Collectively known as the insolvency framework, the bills are designed to update and amend personal and corporate bankruptcy laws to help borrowers restructure their debt. Enactment of the new legislation, designed primarily to reduce banks’ exposure to bad loans, is an obligation stemming from Cyprus’ bailout agreement with international lenders. Three other bills have already been submitted to the House.

Cyprus has suspended operations at its flag carrier after the European Commission ordered the struggling airline to pay back over 65 million euros in illegal state aid, Reuters reported. The last Cyprus Airways flight will take place Friday night, government officials said. EU Competition Commissioner Margrethe Vestager said Cyprus Airways had no chance of becoming viable without continued state subsidies, meaning money paid out in 2012 and 2013 as part of a restructuring package would have to be recovered. The restructuring plan was "based on unrealistic assumptions" the EU Commission said.

How can a midsize bank torpedo an entire economy? It was the first question asked by the new president of Cyprus, Nicos Anastasiades, on March 1, 2013, when he assumed power and was immediately confronted with the implosion of Cyprus Popular Bank and the rescue package that followed just two weeks later, the International New York Times DealBook blog reported. To that end, Mr. Anastasiades has since commissioned a 40-page study that examines in detail how the collapse of the second-largest bank in the country could have such a devastating effect on the Cyprus economy.

Ryanair is one step closer to taking over Cyprus Airways after getting through to the second round of bidding for the ailing flag carrier at the weekend, the Irish Times reported. The Irish airline was one of 15 which submitted proposals to the Cypriot government in September to acquire and turn around Cyprus Airways, which in 2012 needed a €73 million state bailout after losing €56 million. According to incoming finance chief Neil Sorahan, Ryanair was informally told on Friday that it was on a shortlist, meaning it is through to the second round of the process.