Cypriot Non-performing loans drop further in March

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NICOSIA, Aug. 1 (Xinhua) -- Non-performing loans (NPLs) in Cyprus declined to 10.14 billion euros in March, marking a reduction of 151 million euros compared to February, Central Bank of Cyprus said in a report released on Thursday.

According to the central bank data, NPLs accounted for 30.6 percent of the total loans, which in March marked a rise and stood at 33.11 billion euros.

On a quarterly basis, NPLs declined by 116 million euros in March compared with the fourth quarter of 2018, while compared with the first quarter of 2018 NPLs marked a reduction of 8.23 billion euros, reflecting large sales of bad loans to investment funds.

NPLs are the legacy of the 2013 economic crisis and the resolution of the banking system that sent bad loans to a peak of about 48 billion euros, or 52 percent of the total.

The central bank said it was optimistic for the future course of problematic loans.

"From the analysis of data collected by Central Bank in relation to loans of a fixed maturity, it is concluded that there is an improvement in factors which contribute to the reduction of non-performing facilities," the bank said in its report.

Non-performing loans are currently in the center of friction between the government and parliament, which is trying to consolidate legislation which economists and the Central Bank say that make it more difficult for banks to reduce bad loans.

The European Central Bank and the Single Supervisory Mechanism also intervened in the issue, demanding to have a say in what the legislation will provide, pointing out that Cypriot banks are under their supervision.

Standard and Poor's Rating Agency, in a report on Thursday attributing a B+ ratings to Bank of Cyprus long-term credit capability and B to its short-term credit capability, warned that the Cypriot banking system is in danger of being harmed by the legislation.

Nevertheless, Cypriot opposition parties, which proposed the changes to the existing foreclosures legislation ostensibly to protect weak loan owners, dismissed the warnings and are insisting on their line.

The government has given notice that should parliament insist on passing the law for a second time, the president will ask the Supreme Court to declare it unconstitutional -- a move that will lead to a long period of uncertainty until a ruling is issued. Enditem

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