On Friday, June 27, KEDIPES announced a new payment of €60 million to the state.
The funds are intended for the gradual repayment of state aid previously provided to the former Cyprus Cooperative Bank.
Since 2018, KEDIPES has repaid an impressive total of €1.594 billion. The majority of the payments, €1.57 billion, were made in cash. An additional €13.5 million was allocated to implement the “Mortgage to Rent” social support program. Through this program, the company helps vulnerable populations keep their homes. The program allows citizens experiencing financial hardship to remain in their homes by converting their mortgage loan to a state lease with the option to purchase in the future. An additional €10.5 million was spent on other assistance programs, including KEDIPES' participation in the Estia state borrower support plan.
As part of its social mission and strategic role in managing non-performing loans, KEDIPES maintains a reserve fund of €100 million to finance the Mortgage-to-Rent program further. These actions confirm KEDIPES's long-term commitment to both the recovery of the banking sector and its social responsibility to society. The company is expected to continue making regular payments in the coming quarters, thereby reducing the burden of past financial obligations while supporting programs that protect vulnerable citizens.
It should be noted that KEDIPES currently acts as a "bad bank" in the program.
Its main function is to purchase problem debt and other high-risk assets from Cypriot credit institutions. By transferring non-performing loans to the balance sheet of the "bad bank," the Cypriot banking system will eliminate toxic debt totaling €10 billion.
Consequently, small borrowers will be less vulnerable to losing their primary residence in the event of loan default because they will be able to participate in the "Mortgage to Rent" program. KEDIPES buys mortgage-backed properties from debtors. Troubled borrowers are then given the opportunity to rent their property from the "bad bank" for 14 years. During this period, they will be charged rent equaling 65% of the average market rate. Incidentally, the rent for each property is set on an individual basis. At the end of the 14-year period, borrowers can regain ownership of their property if they pay off their debt.
The price of the property for debtors is currently equal to the price at which KEDIPES acquired the property minus the rent paid over 14 years. If the borrower is unable to buy back the property due to lack of funds or death, for example, this right is transferred to their closest relatives on the same terms. Finally, if the terms of the program are not met, KEDIPES may sell the property at its discretion after 14 years.