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ARTICLE · 12 SEPTEMBER 2018

New Legal Framework In The Cyprus Banking Sector

Michael Kyprianou & Co. LLC
Michael Kyprianou & Co. LLC
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European supervisors usually consider a non-performing loan when there are indications that the borrower is unlikely to repay the loan because of financial difficulties or when he is late in paying his agreed installments for more than 90 days.

CyprusFinance and Banking
Polina Polycarpou
Polina Polycarpou
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When does a loan become non-performing?

European supervisors usually consider a non-performing loan when there are indications that the borrower is unlikely to repay the loan because of financial difficulties or when he is late in paying his agreed installments for more than 90 days. This can happen, for example, when someone is unemployed and can no longer repay their mortgage loan as agreed or when a company is facing financial difficulties.

In the worst case scenario, the borrower is completely unable to repay the loan and the bank has to correct the value of the loan it has entered on its balance sheet, sometimes even if it is zero. This is often referred to as a "write-off" of a loan.

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