Following on from recent articles on the Christofi Law website regarding Alpha Bank proposals sent to various clients of Christofi Law, people with foreign currency loans in Cyprus have been contacting Christofi Law to share information on proposals they have received from Alpha Bank.
And the news is that these are very substantial. The largest proposal notified to Christofi Law has been a proposal to write off 75% of the loan at its current value, and to reschedule loan over the lifetime of the borrower. The average proposal received by most clients of Christofi Law seem to revolve around a 20% reduction and a rescheduling over a very long period, often the lifetime of the borrower.
Chris Christofi says “The proposals we are hearing about are quite remarkable. Its not clear why the proposals are being made or what the reasoning is behind them, but its unlikely to be because of the generosity of the bank”.
Christofi also stated that there seemed to be various factors involved. He said “ Generally, people who are not in arrears have not been contacted. We have only heard about these proposals because we have had a policy of not formally going on record and writing to the banks before issuing proceedings for our clients, which means that the banks are not aware that the people they are writing to actually have the benefit of legal advice”.
“It seems that those people who have worked hard to maintain their payments are being frozen out of any settlement”.
With limitation periods looming – December 2013 is the last month for most people to issue proceedings in Cyprus for people who want to challenge their loans- Christofi says “ people need to get in there and issue to have any chance of benefitting from any proposal. The good news is that in Cyprus a concise writ can be issued and held on to by the claimant for a year before actually being served, so people can issue to preserve their position and perhaps decide what they want to do a little later as matters become clearer”.
Christofi also warned people to beware of agreeing fees with advisors who are charging based on a percentage of sums saved. He said “its clear that this is not really in the best interests of the client, as they could end up owing more to their advisor than to their bank. Many of these agreements have “buy out” clauses which penalise the clients if they want to go elsewhere” .
Christofi also stated that clients agonising over whether to issue in Cyprus or in the UK for jurisdiction purposes need to understand that if they issue in the UK, and subsequently jurisdiction is not accepted, then they could find themselves to be out of time to do anything about issuing in Cyprus. “they could also end up paying out a lot in adverse costs orders to their opponents. They need to decide whether the costs and the risk of issuing in the UK are really worth it when compared to Cyprus. Whilst a party can safely issue in Cyprus, a party issuing in the UK has a great risk that their claim will be struck out. Lawyers advice should be clear on this risk and the possible cost consequences, and any suggestion that a party should issue in the UK and also in Cyprus should be viewed with some reservations. “ It is almost certainly what is known as “abuse of process” that may see claims struck out in both jurisdictions because a bank could claim that a party had already opted for UK jurisdiction so should not be allowed the benefit of getting a second bite and arguing jurisdiction again”.
Anyone not certain about their position should have it properly assessed by a lawyer.