The Cyprus Asset Management Company (KEDIPES) has made an announcement regarding the revision of pricing for existing restructured loans. This decision comes in response to consecutive increases in the European Central Bank's (ECB) main refinancing operations interest rate. These increases were driven by significant inflation and their far-reaching impact on household budgets.

Under the new pricing structure, borrowers now have two options to choose from. They can either opt for a fixed-rate period, valid until December 31, 2025, or select a fixed interest rate for the entire duration of the restructured loan.

For the fixed-rate period option, housing loans will carry a stable interest rate of 3.50%, while restructurings related to credit facilities for other purposes will have a fixed interest rate of 4%.

Upon the conclusion of the fixed-rate period, borrowers will be subject to an interest rate equivalent to the prevailing ECB main refinancing operations rate, plus a margin. This margin will be set at 2.00% for restructurings related to housing loans and 2.50% for restructurings pertaining to credit facilities for other purposes.

Furthermore, borrowers have the additional choice of a fixed interest rate for the entire lifespan of the restructured loan. Under this option, housing loans will carry an interest rate of 4.50%, while other loans will be subject to a rate of 5.0%. It's important to note that this option will remain available until the end of July.

It is worth mentioning that these decisions do not apply to account restructurings falling under any schemes of the Central Bank's Equal Distribution of Burdens, nor to loans that may be included in the ESTIA scheme.

CEDIPES reserves the right to terminate or modify the availability of the aforementioned products based on evolving market conditions.

Meanwhile, the Central Bank of Cyprus has made an important announcement regarding reduced legal costs for bondholders of Bank of Cyprus or Laiki Bank who suffered losses during the 2013 financial crisis.

In a press release issued by the CBC, it was stated that the requests for reduced legal costs will pertain to lawsuits that have been filed against the CBC and are in the process of being withdrawn, lawsuits that have already been withdrawn but pending payment of legal costs in favor of the CBC, as well as lawsuits where the Courts have ruled in favor of the CBC but a decision on legal costs is still pending.

The CBC has outlined that if individuals or entities inform the bank of their intention to withdraw their lawsuits, the CBC will cover up to 80% of the legal costs. Typically, in civil and private criminal cases, the losing party is responsible for covering all costs.

Additionally, the CBC has specified that it will fully bear the legal costs in cases involving recipients of guaranteed minimum income or companies that have been liquidated. This applies to cases that have already been withdrawn or cases where the Courts have ruled in favor of the CBC.

Moreover, the CBC has stated that for lawsuits filed by natural persons with an annual gross income not exceeding €35,000, it will cover 70% of the legal costs ruled in its favor, while it will cover 30% of the costs for both natural and legal persons who do not meet the aforementioned criteria.

Furthermore, the CBC has announced that on July 10, it will publish on its website the detailed procedure for submitting requests, which must be submitted by September 8.

During the 2013 financial crisis, Laiki Bank, the second largest lender in Cyprus, was liquidated, resulting in depositors with over €100,000 losing up to 80% of their funds. Additionally, convertible bonds were rendered worthless. Bank of Cyprus, the country's largest lender, sought financial assistance, leading to bondholders losing their investments as part of the bailout. According to the IMF, convertible bonds worth €1.3 billion were written off, with €0.8 billion from Laiki Bank and €0.5 billion from Bank of Cyprus. As part of the bailout agreement, Bank of Cyprus underwent capitalization using the bail-in mechanism, which involved converting 46.5% of uninsured deposits (over €100,000) into equity.