Cyprus News | South’s Banks Are Short of Cash

Cyprus News – South’s Banks Are Short of Cash

Banks in the south are suffering from a lack of cash to fuel the economy. Partly this is because the money that has been deposited has been loaned to borrowers who are not able to pay it back. These Non Performing Loans (NPL) make up nearly half of their lending and the figure is rising.

NPLs are defined as loans which are more than three months in arrears or have been rescheduled several times. This figure currently stands at €23 billion, according to the latest central bank figures. Considering that the south’s GDP is only €17 billion, that’s a lot of money lost from the economy and this figure is expected to rise as more borrowers find themselves unable to pay back loans. Central Bank Governor Panicos Demetriades believes NPLs present “the biggest challenge facing the banking sector in Cyprus.”

A large proportion of NPLs are owed by major Cypriot business groups; particularly developers and commercial conglomerates. It is believed that €6 billion, or 26%, of NPLs is owed by only 30 borrowers. To add to the problem, even if banks wanted to try to recover this money, out-of-date laws make it a difficult and time consuming process.

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