Gold Magazine June - July 2013, Issue 27 | Page 43

Overall Banking Sector

May 2013

In order to safeguard the banks’ capital
buffers, the classification of loans will be
amended by the Central Bank of Cyprus
(CBC) and applied by the end of May. The
CBC‘s guidance on the classification of
loans as non-performing will be amended
to include all loans in arrears by more than
90 days.

June 2013

Domestic banks relying on Central Bank
funding or receiving state aid are required
to establish and submit to the CBC, quarterly, medium-term funding and capital
plans at the end of each quarter starting
from 30 June 2013. The report will be
transmitted to the ECB, the EC, the European Stability Mechanism (ESM) and the
IMF. The plans should realistically reflect
the anticipated deleveraging in the banking
sector and reduce dependency on borrowing from the CBC, while avoiding asset fire
sales and a credit crunch.
The CBC will implement a unified data
reporting system for the banks and the
cooperative credit institutions by the end
of June 2013. The publication of statistical data will be extended to the cooperative
credit institutions.
The authorities should step up the monitoring of the indebtedness of the corporate
and household sectors and prepare quarterly reports, including information on the
distribution of assets and liabilities across
households, and an assessment of debtservicing capacity and refinancing activities
by the end of June 2013. The Financial
Stability Report will be published on a
yearly basis from December 2013.
The authorities should develop a framework and issue legislation as needed to
address legal, administrative or other impediments affecting the restructuring of
viable borrowers, while preserving credit
discipline by the end of June 2013. The
approach will be based on market-based
voluntary workouts, underpinned by
measures to strengthen the legal framework to support debt restructuring.
Amendments will be introduced to ensure
the reduction of built-in costs (fees, requisites) for credit institutions and clients
during restructuring.

December 2013

A mediation service between banks and
their clients to achieve fair debt restructuring will be established by the end of June
2013.

The CBC will increase the minimum
Core Tier 1 capital ratio from the present
level of 8% to 9% by December 2013.

July 2013

March 2014

The supervision of cooperative credit
institutions will be integrated into the CBC
by the end of July 2013. The authorities
will align the regulation and supervision of
cooperative credit institutions to that of the
commercial banks. The accounts of cooperative credit institutions, above a size to
be decided by the CBC after consultation
with the EC, the ECB and the IMF, will
be subject to an independent annual audit
by an external, recognized and independent
auditing firm.

September 2013

The CBC should create a central credit
register listing all borrowers and beneficial
owners from commercial banks and cooperative credit institutions in order to enable
these institutions to check new loan applications against the register. The credit register will identify the borrowers who are or
were in arrears and will help monitor credit
risk and large exposures. A legal framework
for the Credit Register shou