The Central Bank of Cyprus has published a report that looks at how people and businesses changed their loans in the last three months of 2024.
According to information from the island nation's main bank, the total value of loans in this category went down by 4.1% to €878 million from €890 million in the third quarter of 2024.
The main reason for this was the European Central Bank lowering interest rates. Most of the time, the changes affected families. The total amount of money they have available now is €318.4 million, which is more than the €347.1 million they had last quarter. The total amount of business loans that were restructured was €509.1 million. This is more than the €500.6 million that was restructured in the third quarter of 2024.
Looking more closely at the numbers, €343.1 million was spent on restructuring at Bank of Cyprus in the last three months of 2024. This is more than the €291.1 million spent on restructuring at Hellenic Bank in the same period – €174.2 million compared to €209.4 million. At Alpha Bank, €38 million was spent on restructuring.Six million compared to €42 million, Eurobank €100.2 million compared to €103.3 million, CDB Bank €39.3 million compared to €60 million, and the Housing Finance Organisation remained at approximately the same level as in the previous quarter, i.e. around €43.2 million.
It's clear that the right decisions about restructuring help businesses and households to pay what they owe. The Central Bank of Cyprus has said that banks are not facing any new defaults, businesses are continuing to operate smoothly, the number of bankruptcies is going down and this is helping the economy to function in an orderly way.
Just to let you know, if you change the terms of a loan, you are restructuring it.
The loan agreement is still in place, and all issues have been resolved within the organisation that issued it. You cannot switch to another bank. This programme helps borrowers who are struggling to pay back their debts.
Restructuring can be done in one of the following ways:
- The interest rate is reduced, meaning the debtor will spend less on loan repayment each month.
- The loan term is extended, which means the monthly loan payments go up but the total amount owed goes down.
- A loan holiday is granted, meaning only the interest on the loan can be paid for a certain period of time.
- Only the interest on the loan can be paid.
- The interest that has built up is written off.
Important: the loan terms won't get much better for the person taking out the loan. This is just a chance to 'breathe' and avoid a difficult situation, and to keep their relationship with the lender good. Banks agree to restructure to avoid bad debt and get their money back without going to court and having their property seized.