The Board of Directors of KEDIPES, at its last meeting, decided on a new cash payment of €140 million to the State for the first quarter of 2024, as part of the repayment of state aid received by the former Cooperative Bank.
It is worth noting that this is the largest quarterly payment since KEDIPES started operations in 2018 and is mainly due to the recent completion of the sale of the loan portfolio to Bank of Cyprus with a total book value of €58.4 million.
State aid disbursements to KEDIPES thus reached a total of €1.3 billion. At the same time, KEDIPES continues to maintain a €60 million cash reserve to finance the Mortgage for Rent plan, of which it is the executive body.
As a reminder, KEPIDES acts as a "bad bank" in the scheme.
Its main function is to buy up bad debts and other high-risk assets from Cypriot financial institutions. By transferring non-performing loans to the balance sheet of the "bad bank", the Cypriot banking system should get rid of toxic debt totaling €10 billion.
In turn, small borrowers will become 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 for Rent program. KEDIPES buys mortgage homes from debtors. Troubled borrowers are then given the opportunity to rent their properties from a "bad bank" for 14 years. During this period, they will be charged rent at 65% of the market average. By the way, the rent for each property is set individually.
At the end of the term, borrowers can take back the asset if they pay the arrears. The current property price for borrowers in arrears is equal to the price at which KEDIPES purchased the property, less the 14 years of rent paid. In case the debtor is unable to buy the property back, for example, for lack of funds or in case of death, his next of kin gets this right under the same conditions. Finally, if the conditions of the scheme are not met, after 14 years KEDIPES can sell the property at its discretion.