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CB focuses on interest rate cuts

20/01/2015 11:44
The Governor of Central Bank Christalla Georghadji announced the upcoming reduction of interest rates.

Speaking to the parliamentary Committee on Institutions Mrs. Georghadji said that the Central Bank’s Board decided yesterday to take steps towards the reduction of lending rates. She also noted that announcements are expected in 15 days.

She said that loan restructuring targets will be linked to capital requirements for each bank.

Banks must be in pain when they are not restructuring, she noted and added that the measures being considered by the CB aim at viable restructurings.

According to StockWatch sources, CB decided yesterday to take action to reduce deposit rates in order to transfer the reduction to lending rates.

Something similar happened in April 2013, which resulted in significantly reduced deposit rates at levels close to 3%. Lending rates were also reduced but to a much lesser extent.

The Central Bank of Cyprus also decided to exert pressure on the capital needs of the banks in order to increase the rate of restructurings of loans.

Ms. Georghadji said restructurings are being made but not at the desirable rate.

“The CB does not want fast but viable restructurings”, she added.

She suggested that banks do not seek foreclosures, as a potential “flood” of properties is not to their benefit.

“If properties are sold massively, the banks will receive reduced amounts”, she concluded.