Cyprus struggles to ease problem of bad loans

Panicos Nicolaou, chief executive of the Bank of Cyprus. (Reuters)
Short Url
Updated 15 February 2020

Cyprus struggles to ease problem of bad loans

NICOSIA: Defaulted loans are a prime economic issue for Cyprus, which since a 2013 financial crisis has seen overdue payments weigh on consumers and banks. Yet a government scheme to ease the problem has not been embraced by borrowers as had been hoped.

More than 5,600 applications to the ESTIA scheme were submitted by the Dec. 31 cut-off date, about half of what authorities had expected. Of those, only 1,200 applications were complete.

That accounts for €1.7 billion ($1.9 billion) in bad loans, compared with the €9.8 billion overall saddling the banking sector — almost a third of all loans.

The sum is still not insignificant for a country like Cyprus, which has the second highest private debt level in Europe.

The government came up with the relief scheme to deal with the toughest batch of the banks’ bad loan portfolio, loans collateralized with the debtor’s home.

Those seeking help are given the chance to save their homes — with an estimated value of €350,000 and under — from foreclosure.

The Cypriot finance ministry said the low number of applications was possibly owed to a perception that the government would come up with a “more generous” scheme down later, though officials have repeatedly denied they would.

Another reason is a reluctance by “strategic defaulters” to disclose their financial information, such as their income and assets both domestic and abroad so as not to enable banks to go after them.

Some banking and government officials said that the scheme had the upshot in weeding out debtors who are purposely shirking their obligations — so-called strategic defaulters — from those who really want government help.

“We will not, and should not, protect strategic defaulters, nor should we protect those who free ride on the plight of the undeserving to protect their lifestyle by living beyond their means,” Panicos Nicolaou, the chief executive of the country’s largest bank, Bank of Cyprus, told The Associated Press.


UAE dives into Lake Manzala project

Updated 21 September 2020

UAE dives into Lake Manzala project

  • Egyptian campaign aims to return the lake to its previous state and revive local fishing industry

CAIRO: The UAE National Marine Dredging Company (NMDC) has announced that it won the rights to the expansion project of Lake Manzala in Egypt, valued at 600 million UAE dirhams ($163 million).

The company’s announcement of the new project came following a disclosure published on the Abu Dhabi Securities Exchange website. It ensures compliance with the principle of disclosure and transparency in force in the UAE.

Lake Manzala is one of Egypt’s largest natural lakes. It is known for its potential fishing opportunities, as it has the basis for high fish stocks due to natural nutrients and a moderate climate throughout the year. It produces about half of the natural fish production in lakes.

The lake has witnessed neglect in recent years, losing much of its importance and wealth. In May 2017 Egyptian President Abdel Fattah El-Sisi launched a national project to develop Egyptian lakes, with a key focus on Lake Manzala.

NMDC said in a statement that winning the project came through its partnership with the Egyptian-Emirati Challenge Company. It said that it will take about two years to implement the project.

NMDC is one of the leading companies in the field of dredging, land reclamation and civil and marine construction in the Middle East. The Lake Manzala development project aims to improve the quality of water to restore free fishing and return the lake to its previous state, which will boost the local market and export output.

President El-Sisi said that Lake Manzala will contribute to enhancing Egypt’s fishing industry, and export operations will be activated after its full development. He directed the border governorates, in coordination with the Ministry of Interior and the Armed Forces, to remove all encroachments and criminal outposts on the lake.

Several days ago, Dakahlia governorate completed a difficult operation to remove encroachments on the lake. A large campaign that used Armed Forces Engineering Authority equipment removed 301 houses in the Abdo El-Salhy area in El-Matareya city, known as the “fishermen’s land,” which was built on areas that were filled in from the lake. The operation occurred after local fishermen were persuaded to obtain compensation for vacating their houses.

Magdy Zaher, executive director of Manzala Lake, said that the engineering authority used 320 excavators and 20 imported suction dredgers to work in the lake.

The authority dredged the upper islands isolated from the water with the help of an Emirati bulldozing company to increase the efficiency and purification of Lake Manzala.

Zaher said the lake project will require several steps.

The most important is the removal of encroachments on the water surface and doubling its area to 250,000 feddans, he said. Dredging and deepening the lake, opening the gates and extending the radial channels to allow Mediterranean waters to enter the lake will follow, he added.

A safety belt will come in the form of a road 80 km long and 30 meters wide, which will surround the lake and prevent future encroachments. It will also divert the course of the Bahr El-Baqar water treatment plant, which pours 12 million cubic meters of sanitary, industrial and agricultural drainage into the lake, Zaher said.