Announcement by the Central Bank of Cyprus: application of measures to Credit Acquiring Companies
The Minister of Finance has issued a Decree (the Taking of Emergency Suspension Measures by Financial Institutions and Regulatory Authorities Decree, RAA 134/2020) on Monday 30 March 2020, in accordance with the newly enacted Law of the Taking of Emergency Suspension Measures by Financial Institutions and Regulatory Authorities, L. 33(I)/2020 (Law), allowing for the suspension of the loan and facility instalments and interest payments to Financial Institutions (as defined therein), for nine months until 31 December 2020 (Decree).
Pursuant to the Decree the Central Bank of Cyprus (CBC) has followed suit by issuing an announcement on 6 April 2020 (Announcement), following its previous announcements of 16 and 18 March 2020, addressing Credit Acquiring Companies (CyCACs) with recommendations on the proper application of measures imposed by the Decree.
In the Announcement, the CBC expresses its expectations that CyCACs will contribute to the joint efforts towards quick financial recovery for businesses and households. In particular, the CBC urges CyCACs to proceed in an expedited and not time-consuming manner with sustainable restructurings, acting in accordance to the directive of CBC on arrears management. Furthermore, CBC recommends CyCACs to avoid imposing any fees over restructuring procedures where these cannot be fully justified and, at the same time, any fees that are charged should be fully understood by the borrowers. It is important to note that the Decree is applicable only to compliant borrowers who, up until 29 February 2020, do not present any arrears in the payment of their instalments of more than 30 days from the relevant date provided for in their loan or facilities agreements and who are facing difficulties in repayments due to COVID-19.
CBC additionally urges CYCACs, when formulating their arrears management strategies, to take into consideration the peculiar and unprecedented financial conditions that the majority of adversely affected borrowers are faced with due to the circumstances brought about by the COVID-19 pandemic. At minimum, it is recommended, that restructurings should be made in a timely manner, taking into account the overall special circumstances that Cyprus is undergoing.
Finally, bearing in mind the restrictions on movement imposed on the public by the emergency restrictive measures, CBC advises that, where possible, any information required by CyCACs from borrowers, in relation to such restructurings, be obtained without a borrower being required to be physically present at CyCAC’s premises.
The Announcement of the CBC dated 6 April 2020 can be found here(only available in Greek).
The CBC Directive on arrears management can be found here (only available in Greek).
The Decree issued by the Ministry of Finance can be found here (only available in Greek).
If you have any questions, please contact George Apostolou or your usual Harneys contact.
