The Ministry of Finance has proceeded with the classification of approximately 700 financially non-viable borrowers that have applied for the “ESTIA” Scheme, sources told CNA.
The “ESTIA” Scheme aims to facilitate fiscal assistance from the Cypriot State to borrowers with non-performing loans secured by a primary residence and to contribute to the deleverage of the non-performing loans of Cypriot banks. Non-performing borrowers that meet certain eligibility criteria will be restructured and granted a state subsidy of 1/3 of the total restructured loan instalments.
However, according to the sources, the Ministry has classified 700 borrowers based on the reasons that they were not viable, according to the Scheme’s criteria. These borrowers will then be handled in the same manner and on a case-to-case basis. Their loan could be impaired by the bank by up to 60%, depending on the income of each borrower and the ability of the bank. The repayment of the remaining amount of the loan after the impairment, will be borne by 50% by the borrower and the state.
In addition, as CNA has learnt, the Ministry of Finance is still waiting until the completion of the review process of all applications for ESTIA, firstly by the banks and secondly by the competent Service at the Ministry of Labour, Welfare and Social Insurance, in order to consider what can be done in cases of loans where borrowers can not contribute even a small amount by way of instalment.
"Everything will depend on the number of non-viable borrowers," a competent source told CNA, stressing that on the basis of data so far, which bring non-viable borrowers to around 700, "the situation is manageable."
The source also noted that the current situation could change if the number of unsustainable borrowers increases significantly, after the review of the last approximately 2,000 applications of “ESTIA” is completed by the competent service of the Ministry of Labour, Welfare and Social Insurance.