Borrowers association welcomes extension of support measures

The president of the Cyprus Borrowers Association (Syprodat) Costas Melas on Tuesday welcomed the recent decision by the Cabinet to extend a range of government support measures, noting that it would provide much-needed respite for citizens.

“Crucially,” Melas said, “we must devise immediate and effective solutions aimed at supporting households, borrowers, and small to medium-sized enterprises”.

Moreover, Melas noted that Finance Minister Makis Keravnos, in his address at the annual general meeting of the Association of Cyprus Banks, expressed his expectation for significant strides towards narrowing the gap between deposit and lending rates.

“Moreover,” Melas added, “he advocated for a sustainable reduction in lending rates, particularly in light of the European Central Bank’s recent marginal rate cut of 0.25 points.”

Furthermore, Melas highlighted the Finance Minister’s call to banks, credit purchase companies, and credit management firms “to intensify their efforts and adopt positive approaches to achieve a substantial decrease in non-performing loans (NPLs).” Such measures, he noted, “would prove mutually beneficial.”

Specifically, at the AGM, Keravnos said that “as a Finance Minister respecting the independence of the Central Bank of Cyprus, I have made many recommendations to banks for the re-evaluation of their interest rate policy”.

He also acknowledged that “our interventions have had some marginal results as banks have adopted some positive measures regarding the absorption of the increased cost from the rise in interest rates as well as the formation of deposit rates”.

Addressing banks directly, the Finance Minister emphasised that “I expect to see drastic moves in two directions”.

“First, the reduction of the spread between deposit and lending rates and, secondly, not a repetition of interest rate increases but a substantial course of de-escalation of lending rates, especially after the marginal reduction of rates by 0.25 points by the ECB,” he explained.

“I want to convey to our banks in the strongest possible terms the cries of anguish from households, our businesses, and the common political perception regarding the level of lending rates, which is one of the most serious inhibitory factors in the development of the economy and in addressing social issues such as housing,” he added.