Responsible for creating a crisis that nearly collapsed them and their country, Cypriot banks are being pushed nonetheless to ferociously go after bad loan debtors after the government four years ago authorized the confiscation of 47.5 percent of bank accounts over 100,000 euros ($117,800).
After nearly wiping out the life savings of many small businesses and people who had put money in their banks for years, the institutions were told by the European Central Bank’s Daniele Nouy, Chairwoman of the Supervisory Board they need to apply “additional and persistent” efforts to go after people who can’t pay.
None of the Cypriot bank officials who caused the crisis have been held to account as promised by Cypriot President Nicos Anastasiades, who reneged on promises to bar the confiscations after it was demanded by international creditors in return for a 10-billion euro ($11.78 billion) bailout.
Nouy, who heads banking supervision at the ECB, said there had been uneven progress on handling the problem at banks in Cyprus.
“Notwithstanding some progress in NPL resolution, the very high level of NPLs remains a key vulnerability of the Cypriot economy and banking system, and weighs on the ability of banks to carry out their credit intermediation function. It is, therefore, essential that NPL resolution be accelerated,” Nouy said in an interview with the semi-official Cyprus News Agency.
Bad loans account for more than 40 percent of the total loan book in the Cypriot banking sector, among the highest in the European Union but the country has come back from the crisis although the depositors who were crushed by the confiscations haven’t.