The legislature wants to burden the banks with €170 mn favouring the legislative regulation of about €1 bn in housing loans which have been given in swiss francs.

In spite of the central bank's objections, the majority of the members of the parliamentary committee of finance, favors the legislative regulation of the issue so as to alleviate the problems that were created with three thousand accounts, mainly of foreigners, because of the revaluation of the swiss franc.

The issue was again discussed in front of the committee, with the CB's representative Elena Gregoriades stressing that a possible legislative regulation of the issue could potentially create a disruption to the banking system.

She also underlined that there could be a potential negative impact on the banks' capital while there would be issues of moral hazard.

As she said the majority of the loans in foreign currencies was extended by bank of Cyprus and Alpha bank.

According to Mrs. Gregoriades, based on data provided by banks, if loans are converted into euros at a previous rate, the Bank of Cyprus will have to take on losses of € 147 mn, € 11 mn losses will be suffered by the Hellenic Bank and €10 mn by Alpha Bank, with the latter calculating damages coming from loans only for primary residence.

She said that based on CB's data housing loans in Swiss francs, amounted to € 1,05 bn in 3,000 accounts at the end of August, of which 40% are held by residents of Cyprus.

Faced with reactions from MPs that the CB has not solve the problem so far, she noted that the CB contacted commercial banks in order to improve plans offered to borrowers saying that contacts have had positive results.

As she said, on the basis of CB calculations, someone who had borrowed in Swiss francs in 2008-2010, had a loss of 35% -40% with the current rate.

Committee members were not satisfied with the explanations of CB, particularly by the fact that no solutions were proposed, while the report of the CB was considered unsatisfactory.