Cyprus

The finance ministry yesterday handed parties the drafts of three bills concerning the insolvency framework, seen as providing an extra ‘safety net’ to debtors who have fallen on hard times, CyprusMail reported. The framework will be made up of six bills. The ministry has asked party experts to a meeting on October 31 to discuss the drafts, just as the Supreme Court is expected to hand down a verdict on the validity of the foreclosures bill demanded by the troika of international lenders.

The Cabinet yesterday green-lighted the establishment of a project team tasked with implementing new insolvency procedures, CyprusMail reported. According to a statement, the team will comprise of at least three officers from the Department of Companies and Official Receiver, as well as the finance ministry, which is the project manager.

As the Cypriot economy reeled from the collapse of its second-largest bank in 2013, the European Central Bank faced a thorny question: Should it keep the institution, Cyprus Popular Bank, alive with short-term loans or pull the plug? By many financial measures, the bank was failing, the International New York Times DealBook blog reported in an analysis. Stung by a disastrous bet on Greek government bonds, Cyprus Popular Bank had been in trouble for the better part of 2012 and depositors were withdrawing their savings in ever larger numbers. It needed cash and fast. Under E.C.B.

Hotel-management chain Aqua Sol, owner and administrator of 15 hotels in Cyprus, Rhodes and Crete, along with its nine subsidiaries has been placed under receivership for its failure to comply with its contractual obligations with the Bank of Cyprus, it was announced on Tuesday, Cyprus Mail reported.

The Cabinet will this week likely ask parliament to issue a binding resolution stating that an insolvency framework will be passed and take effect as of January 1, Cyprus Mail reported. The resolution will be binding on both the government and the legislature, sources said. Opposition parties want, in writing, additional and concurrent safeguards for homeowners who have trouble servicing their mortgage, otherwise threatening to vote down the government’s foreclosures bill.

The archbishop of Cyprus has taken the unusual step of urging thousands of small investors in the island’s biggest bank to reject a €1bn share sale agreed with international fund managers and the European Bank for Reconstruction and Development when it comes up for approval next month at an extraordinary general meeting of shareholders, the Financial Times reported.

Cyprus plans to seek a buyer for the local operation of Federal Bank of the Middle East, a Lebanese-controlled lender, which has been placed under administration by the island’s central bank following allegations of money-laundering, the Financial Times reported. FBME, which has a $2bn balance sheet, was accused by the US Treasury’s financial crimes enforcement network (FinCEN) of facilitating a “substantial volume” of money-laundering through its network for many years.

Cyprus is set to become the latest peripheral eurozone country to return to global debt markets just one year after its controversial €10bn bailout by international lenders, the Financial Times reported. The island state has hired five banks to set up meetings with possible investors in a new sovereign bond as government borrowing costs across peripheral Europe continue to fall to record lows. Although the country issued €100m of six-year bonds through a private placement in April, this will be the first formal bank-managed bond issue since its rescue.

Jeroen Dijsselbloem was not expecting a warm welcome, and he did not receive one. Seated at the front of a cavernous lecture hall at the University of Cyprus, the Dutch finance minister, who shepherded through the island’s controversial €10bn bailout a year ago as chair of the eurogroup of finance ministers, was harangued by students and faculty alike for what the programme has done to the Cypriot economy, the Financial Times reported. “For something that you say was inevitable, it seems surprisingly ill-prepared,” said Sofronis Clerides, an associate professor of economics.

Cypriot lawmakers must make it easier for banks to seize property when borrowers default to tackle the issue of bad loans, the country’s most pressing issue, central bank governor Panicos Demetriades said, Bloomberg News reported. Borrowers who intentionally fail to repay loans need to be reined in, Demetriades said in an interview yesterday in Athens. A possible political fight may delay planned legislation to tackle the Mediterranean nation’s stock of bad debt, he said. The law is required under the country’s 10 billion-euro ($13.8 billion) international rescue put together a year ago.