The Cyprus Ministry of Finance published a speech to the Cyprus Banks Association annual general meeting setting out the government's assessment of the banking sector and its policy priorities. The ministry said Cyprus' banks are entering current European policy developments from a position of strength, with a common equity tier 1 ratio of 25.1% in March 2026, but stressed that nonperforming loans remain elevated in the real economy even as they have fallen on banks' balance sheets. The speech linked that assessment to broader economic conditions, citing 3.8% growth in 2025, near full employment and public debt projected to fall to about 50% of gross domestic product by year-end. It said bank assets increased in the first quarter of 2026 as lending and debt securities investment rose, while sector profitability remained high at about EUR 1 billion in 2025, albeit below 2024 because of interest rate changes. On distressed debt, the ministry said the government has advanced bills and regulatory measures to support a stable management framework, strengthen borrower tools, improve debt restructuring and expand the powers of the Financial Ombudsman. It also pointed to legal and institutional concerns over member-sponsored laws passed by parliament on foreclosure suspensions and loan and guarantee restructuring, noting that the president referred them back and to the Supreme Court and that the European Central Bank warned they could widen financial risks and potentially create fiscal risks. Looking ahead, the ministry said banks should channel more financing to businesses in productive sectors, improve access to finance for households and especially small and medium-sized enterprises, and support the shift to a greener growth model. It also highlighted policy work during Cyprus' first-half 2026 presidency of the Council of the European Union on the Banking Union and the digital euro, and said full implementation of the Markets in Crypto-Assets Regulation is important as crypto-assets and artificial intelligence reshape financial services and related risk management, governance and cybersecurity expectations.
Ministry of Finance (Czech Republic)2026-06-23
Cyprus Ministry of Finance outlines banking priorities on bad loans MiCA implementation and lending to productive sectors
In a speech to the Cyprus Banks Association, the Cyprus Ministry of Finance said the banking sector remains strong and well capitalised, but nonperforming loans are still a concern in the real economy. It highlighted government measures on debt management and flagged European Central Bank concerns about laws on foreclosure suspensions and loan restructuring. The ministry also urged banks to expand lending to productive sectors and SMEs and to implement European rules on crypto-assets while managing risks from digitalisation and artificial intelligence.