On Friday 11th October the Central Bank of Cyprus published a new report on loan restructurings.
As it turned out, the total volume of restructurings carried out by credit institutions in the island state showed a slight decline in the second quarter of this year.
Between April and June, the total value of restructured loans fell to €937 million from €1.039 billion in the corresponding period last year. This represents a decrease of 4.0%. At the same time, the total value of restructured loans fell by 5% compared to the previous quarter.
According to the bank, the total amount of loans outstanding at the end of June was €21.1 billion, up from €20.9 billion at the end of April. This amount includes only regular loans from credit institutions that lend heavily to the local economy.
At the end of the second quarter of 2024, the restructuring balance of loans at regular maturity reached €313 million, of which €180.7 million were to enterprises and €131.5 million to households.
Looking in more detail:
- Hellenic Bank restructured loans totalling EUR 224.3 million during the period under review, of which EUR 96 million to enterprises and EUR 128.3 million to households;
- Αlpha Bank restructured loans totalling EUR 120 million, of which EUR 99.9 million to enterprises and EUR 20.1 million to households;
- Eurobank restructured loans totalling EUR 107 million, of which EUR 81 million to enterprises and EUR 26 million to households;
- Astrobank restructured loans totalling EUR 46 million in the period under review, of which EUR 28 million to enterprises and EUR 18 million to households;
- CDB Bank restructured a total of EUR 61.6 million in the period under review, of which EUR 47.5 million to enterprises and EUR 14.1 million to households;
- The National Bank of Greece restructured a total of EUR 7.5 million in the period under review, of which EUR 4.7 million to enterprises and EUR 2.8 million to households;
- Ancoria Bank carried out a general restructuring of loans in the period under review for a total amount of EUR 1.8 million, of which EUR 1.7 million to enterprises and EUR 0.1 million to households.
Remember that a restructuring is a change in the terms of an existing loan.
The loan agreement remains in force and all issues are settled with the organisation that issued it. It is not possible to switch to another bank. The aim of this programme is to improve the financial situation of the borrower who has had difficulties in repaying the debt.
Restructuring is carried out according to one of the following options:
- Reduce the interest rate - each month the debtor will spend less on servicing the loan;
- Stretching" the term of the loan - the term is increased, but the amount of monthly payments on the loan is reduced;
- give the borrower a credit holiday - for some time it is possible to pay only the interest on the loan;
- You can pay only the interest on the loan;
- Write off the accrued interest.
It is important to note that the terms of the loan are not fundamentally improved - for the debtor it is only an opportunity to "take a break", to avoid a difficult situation, not to spoil relations with the creditor. Banks agree to restructuring in order to avoid being saddled with bad debts and to get their money without having to go to court and seize property.