NICOSIA, July 19 (Xinhua) -- Cypriot President Nicos Anastasiades on Friday sent back to parliament opposition-supported legislation making more difficult for banks to foreclose on collateral securing primary residences of weak loan owners, the government spokesman said.
He added that in a letter to parliament, Anastasiades said the legislation rendered the foreclosure legislation ineffective and raised the risk of downgrades of the creditworthiness of the banks and the economy by rating agencies.
"We must not create problems of stability to the banking system," said the president, making a reference to a warning by Moody's rating agency that the legislation would make it difficult for banks to reduce non-performing loans, increasing the need for higher provisions.
"During these days we are witnesses to reactions, for example by international rating agencies, and attention is called for so as not to add more pressures and problems on a sector, the problems of which we are trying to solve," he added.
The parliament, which by law must act within 15 days, has already announced that it will reconvene from its summer recess for an urgent session on Monday to examine the reasons cited by the president for his referral of the law.
Citing law-specific reasons for his action, Anastasiades said the legislation, which was proposed and passed by opposition deputies mustering majority in the 54-member chamber, induced a reduction in the value of properties and changed the rights of the parties in the loan agreement.
Though banks reduced non-performing exposures from a peak of 48 billion euros -- 52 percent of total loans at the peak of the financial crisis in 2014, to about 8 billion euros or about 30 percent of total exposures, banks face continued pressure from European supervisors to further reduce bad loans.
