NICOSIA, Aug. 6 (Xinhua) -- Estia plan, a special government scheme drawn up by Cyprus' Ministry of Finance and approved by the European Commission's Directorate-General for Competition, did not meet the expectations that it would help considerably reduce non-performing loans, the most serious legacy of the 2013 economic crisis that forced the eastern Mediterranean island into a bailout, Cyprus News Agency reported on Thursday.

The report said that just 1,132 duly completed applications for mortgage relief were submitted by the end of the cutoff day on July 31, and of those 220 were rejected as being outside the main condition that the mortgaged property should not be worth more than 350,000 euros (415,700 U.S. dollars).

Estia plan was launched about two years ago, when it was announced that it was meant to help about 10,000 people repay their non-performing loans.

Under the plan, owners of bad debts secured by a primary residence worth up to 350,000 euros would have their debt reduced by one third, with the government subsidizing the monthly installment by one third for 25 years until full repayment.

When the plan was launched, it was stated that it would help reduce non-performing loans held by the banks by up to 3.5 billion euros, or about one-third of non-performing loans. It would also safeguard that loan owners would not lose their residence through foreclosure.

However, even if all 912 applications are approved by banks, the total reduction of non-performing loans would amount to just below 320 million euros.

Banks have up to Aug. 31 to examine the applications and decide which of the loans will be restructured and the properties securing them will be exempted from foreclosure.

Non-performing loans amounted to just over 9 billion euros, out of total loans amounting to 32.4 billion euros, at the end of March, 2020, according to the latest data announced by the Central Bank of Cyprus. At the height of the 2013 crisis, non-performing loans amounted to over 27 billion euros, or 52 percent of total loans.

Bank of Cyprus, the biggest lender of the island, announced on Monday the sale of 916 million euros in non-performing loans to funds belonging to the Pacific Investment Management Company (PIMCO).

PIMCO was the firm which estimated at 10 billion euros the bailout amount Cyprus would need to borrow from its creditors, the Eurogroup and the International Monetary Fund. (1 euro = 1.19 U.S. dollars) Enditem

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