KEDIPES, the Cypriot asset management company, recently announced that it has paid another €70 million in repayment of state aid received by the former Co-operative Bank.
Notably, this is one of the largest quarterly payments since the authority began operations in 2018.
This brings KEDIPES' state aid repayments for 2024 to €310m, and €1.47bn for the whole period.
While this year's good results have been positively influenced by the stability of the legal framework for foreclosures, any negative changes to this framework, as well as to other existing or proposed laws relating to Kedipes and credit or asset management companies in general, would have a significant impact on the company's ability to implement its business plan, as well as on its ability to fully repay the state aid due, the authority said.
At the same time, KEDIPES continues to maintain a cash reserve of €100 million to finance the Mortgage to Rent scheme of which it is the executive body.
It is recalled that KEPIDES now acts as a 'bad bank' in the scheme.
Its main function is to buy bad debts and other risky assets from Cypriot financial institutions. By transferring non-performing loans to the balance sheet of the 'bad bank', the Cypriot banking system will be relieved of toxic debts totalling €10 billion.
In turn, small borrowers will be less vulnerable to the threat of foreclosure of their primary residence if they default on their loans, as they will be able to participate in the Mortgage to Rent programme. KEDIPES buys mortgages from borrowers. Troubled borrowers are then given the opportunity to rent their property from a 'bad bank' for 14 years. During this period, they are charged a rent of 65% of the market average. The rent will be set individually for each property.
At the end of the term, borrowers can take back the property if they pay the arrears. The current price of the property for borrowers in arrears is equal to the price at which KEDIPES purchased the property, less the 14 years of rent paid. If the borrower is unable to repurchase the property, for example due to lack of funds or in case of death, his next of kin will have the right to repurchase the property under the same conditions. Finally, if the conditions of the scheme are not met, KEDIPES can sell the property at its discretion after 14 years.