Non-performing loans in Cypriot banks reach reversal point: CBC

Non-performing loans (NPL), which are the biggest problem in the banking system of bailed-out Cyprus, have reached a reversal point, the Central Bank of Cyprus (CBC) said on Wednesday.

"The analysis of data concerning non-performing (loan) facilities shows that the upward trend noticed in the past has stopped, while during September a drop has been recorded," a CBC statement said.

Non-performing loans shot upwards to around 28 billion euros (29.7 billion U.S. dollars), representing over 50 percent of banks' total loan portfolios after a messy 10-billion-euro bailout of the country in March 2013.

The bailout memorandum provided for strict austerity measures and the restructuring of the banking system, including the first capitalization in the world with the conversion of large amount deposits into bank equity.

CBC said in the statement that one third of NPLs, amounting to 10.4 billion euros, had actually been restructured by the end of September but were still shown on the red list.

Restructured loans are under surveillance and are being listed as non-performing for 12 months even as they are serviced regularly.

"Data in the possession of the CBC show that the trend of restructuring is on the increase ... having reached 1.3 billion euros during the third quarter of 2015," the statement said.

It added that 55 percent of almost 14,000 requests for loan restructuring in the third quarter had been completed and 38 percent had been moved into October, with 7 percent having been rejected either by the banks or the loan owners.

The loan restructuring is being facilitated by the office of the financial ombudsman who appoints accredited consultants as intermediaries. (1 euro = 1.06 U.S. dollars) Endit