Cypriot banks need to apply “additional and persistent” efforts to wrestle down a stockpile of nonperforming loans (NPLs), the European Central Bank’s Daniele Nouy said in an interview published on Monday.
Nouy, who heads banking supervision at the ECB, said there had been uneven progress on handling the problem at banks in Cyprus.
“Notwithstanding some progress in NPL resolution, the very high level of NPLs remains a key vulnerability of the Cypriot economy and banking system, and weighs on the ability of banks to carry out their credit intermediation function. It is, therefore, essential that NPL resolution be accelerated,” Nouy said in an interview with the semi-official Cyprus News Agency.
Toxic loans account for more than 40 percent of the total loan book in the Cypriot banking sector, among the highest in the European Union. [Reuters]