The Central Bank of Cyprus identified three main reasons due to which the banks were able to significantly reduce the level of non-performing loans (NPLs).
The modernization of the legal framework and the appropriation of laws on real estate seizure from insolvent borrowers were of tremendous and primary importance.
The second factor is the resale of NPLs to credit acquiring companies.
The third factor is the restructuring of loans: extension of repayment terms and reduction of monthly installments.
Today, the average level of NPLs on the balance sheets of Cypriot banks is 22.3% (or € 6.703 billion), which is still much higher than the intermediate European level, but well below 50%, as it was in the acute phase of the financial crisis of 2013 and the first post-crisis year.
As of December 31, 2014, the NPLs level was € 20.6 billion. In 6 years, the amount has decreased by 75%, which is a considerable achievement.