Cyprus parliament adopts crucial foreclosure bill

The Cypriot parliament adopted Saturday a controversial bill to streamline bank foreclosures of bad debts, as well as a second bill to protect first residences and small businesses. The emergency vote came a day after a deadline set by international lenders who bailed Cyprus out last year and had warned that the next tranche of a 10 billion euro ($13.1 billion) loan would be withheld unless the bill was passed.
The foreclosure bill was approved by a vote of 47-seven, with one abstention, in the 56-member House of Representatives. The bill to protect first homes, sparked by fears of mass repossessions in the recession-hit economy, was backed by the opposition parties which hold a parliamentary majority.
It was opposed by the ruling right-wing Disy party. Government spokesman Nicos Christodoulides welcomed passage of the foreclosures bill, saying in a statement that it "changes and modernises" current procedures. He said the bill, supported by the troika of international lenders, was passed without substantial changes to its content. As to the second bill passed, he said the government "would carefully evaluate its content and possible consequences."
He said the government aims "to promote reforms in a way that primarily ensures the protection of vulnerable groups, while simultaneously guaranteeing the process of recovery and stabilisation of the economy." Around 46 percent of Cypriot bank loans are classed as non-performing (NPLs) for being seriously in arrears. Under current legislation, it can take banks 20 years to recover the money.
The troika (International Monetary Fund, European Commission and European Central Bank) said that, if the bill were not passed, the NPLs must be classed as non-recoverable and Cypriot banks will fail EU stress tests due in the autumn. The next 436 million euro tranche of bailout money is due in late September.
In return for the March 2013 rescue, the government adopted swingeing austerity measures and radically restructured the bloated banking sector. Credit rating agency Moody's Investors Service said in early August that Cyprus has an "elevated risk of default in the medium-term" because of the high level of NPLs.