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The Central Bank of Cyprus instructed banks to submit on a quarterly basis information on the progress in their restructurings of loans in arrears based on target indicators it set aiming at helping banks decrease their 90 days past due exposures and prevent 30 days past due from increasing.

The targets will apply to the whole loan portfolio and to sub-portfolios four, namely mortgages, other loans to households, loans to non-financial firms up to €1m and loans to financial firms over €1m, the central bank said in an emailed statement today. The first submission of this type of information will concern the quarter that ended in June.

“For this quarter banks were asked to submit their actual performance in relation to the four indicators and their targets for the third and fourth quarter of 2015,” the central bank said. “The submission for the next quarter, that is for the quarter ending on September 30, 2015, banks are required to submit their actual performance for the third quarter of 2015 and their revised targets for the fourth quarter of 2015 and the first quarter of 2016”.

In the case banks fail to meet the targets set by the central bank, they will have “to provide detailed explanations” and inform the supervisory authority about the measures aiming at rectifying the situation they intend to take, the central bank said. “The Central Bank of Cyprus has imposed an upward revision of the banks’ targets in cases where it considered that the targets set by the banks were low. With every new submission the Central Bank of Cyprus will be reviewing and revising the targets on the basis of the developments”.

The first performance indicator concerns “proposed sustainable solutions as a percentage of the loans presenting arrears over 90 days,” the central bank said adding that the second indicator will reflect the situation of “concluded sustainable solutions”.

The third indicator will provide information about restructured loans which show arrears of less than 8 days, as a percentage of total restructured loans, it said. Loans in arrears over 30 days and up to 90 days at the beginning of the quarter which at the end of the same quarter do not present any arrears either because of restructuring or other measures taken by the bank, will make out the fourth indicator.

By Stelios Orphandies