Article 1
Open ↗Article 2 of Implementing Decision 2013/463/EU is amended as follows: (1) Paragraph 5 is replaced by the following: ‘5. With a view to restoring the soundness of its financial sector, Cyprus shall continue to implement the restructuring of the banking and cooperative credit-institution sectors, continue to strengthen supervision and regulation, also taking into account the role of the Single Supervisory Mechanism (SSM), and undertake a reform of the debt-restructuring framework, while safeguarding financial stability. The programme shall provide for the following measures and outcomes: (a) ensuring that the liquidity situation of the banking sector is closely monitored only for as long as is strictly necessary to mitigate serious risks for the stability of the financial system. The funding and capital plans of domestic banks relying on central bank funding or receiving State aid shall realistically reflect the anticipated deleveraging in the banking sector, and reduce dependency on borrowing from the central bank, while avoiding asset fire sales and a credit crunch; (b) adapting the minimum capital requirements, taking into account the parameters of the balance sheet assessment and the comprehensive assessment; (c) providing that banks with a capital shortfall may, if other measures do not suffice, ask for recapitalisation aid from the State in accordance with State-aid procedures. Banks with restructuring plans shall report on the progress in their implementation of the plans; (d) ensuring that the credit register is fully operational; (e) taking into account the role of the SSM, ensuring the full implementation of the regulatory framework with respect to loan origination, asset impairment and provisioning; (f) ensuring that banks regularly communicate with authorities and markets with regard to their progress in restructuring their operations; (g) ensuring the revision of the governance directive, which will specify, inter alia, the interaction between banks' internal audit units and bank supervisors; (h) strengthening the banks' governance, including by prohibiting lending to independent board members or their connected parties; (i) ensuring the necessary staff and amendments in light of the new responsibility taken on by the Central Bank of Cyprus (CBC), in particular for the resolution and supervisory functions, and the transposition into national law of the Single Rulebook, including Directive 2014/59/EU of the European Parliament and of the Council ( *1 ) and Directive 2014/49/EU of the European Parliament and of the Council ( *2 ) ; (j) streamlining the regulation and supervision of insurance companies and pension funds; (k) strengthening the management of non-performing loans, taking into account the developments and timelines of the SSM. This includes notably: the monitoring and publication of restructuring targets set by the CBC; measures to allow lenders to obtain adequate information on the financial situation of borrowers, and to file for, obtain, and realise an attachment of financial assets and earnings of delinquent borrowers; measures to allow and facilitate the transfer by lenders to third parties of existing loans, together with all collateral and securities, without having to obtain the consent of the borrower; (l) adopting legislation ensuring the swift transfer of issued title deeds to property-buyers while safeguarding against abuse; (m) easing constraints on the seizure of collateral, notably by ensuring the smooth and effective functioning of the revised foreclosure framework; this shall be accompanied by implementing and complementing the comprehensive reform of the corporate and personal insolvency procedures, including any additional administrative acts and regulations needed. The implementation and performance of the new insolvency framework shall be monitored on a continuous basis to ensure that it supports its objectives and principles, and if necessary, amendments will be proposed. Also, a comprehensive review of the private-sector debt-restructuring legal framework shall be conducted by early 2016, with an action plan of modifications to that framework to correct any deficiencies. Recommendations on the Civil Procedure Code and Court Rules shall be formulated to ensure the smooth and effective functioning of the revised foreclosure law and the new insolvency framework, also aiming at improving the pace of court handling and the reduction of backlogs in courts; (n) ensuring that the Cooperative Group provides for timely and complete implementation of the agreed restructuring plan and takes further measures to improve its operational capacity, in particular in the areas of arrears-management, Management Information Systems, governance, and management capacity; (o) continuing to further strengthen the anti-money-laundering framework and implementing an action plan ensuring the application of improved practices with regard to customer due diligence and entity transparency, in line with best practice. ( *1 ) Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council ( OJ L 173, 12.6.2014, p. 190 )." ( *2 ) Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes ( OJ L 173, 12.6.2014, p. 149 ).’." (2) The following paragraph is inserted: ‘7b. For the fiscal policy in 2017-2018, the Cypriot authorities shall pursue a general government balance that will ensure debt sustainability and is in line with the adjustment path prescribed by the Stability and Growth Pact.’. (3) In paragraph 8, point (h) is replaced by the following: ‘(h) reform of the public administration to improve its functioning and efficiency, in particular by reviewing the size and functional organisation of the public service, improving the wage-setting mechanism, introducing new staff-appraisal and promotion systems and increasing staff mobility in order to ensure the efficient use of government resources and the provision of a quality service to the population;’. (4) Paragraphs 12 and 13 are replaced by the following: ‘12. Cyprus shall ensure a reduction in the title deed issuance backlog, and streamline procedures in order to allow for the swift and efficient issuance of new building certificates and title deeds. 13. As part of the Action Plan for Growth, Cyprus shall take initiatives to strengthen the competitiveness of its tourism sector, notably by implementing the tourism-sector action plan, by identifying impediments to competition in the tourism sector, by adopting a new national tourism strategy, and by implementing an aero-political strategy taking into account the Union external aviation and aviation agreements, while ensuring sufficient air connectivity.’. (5) Paragraph 16 is replaced by the following: ‘16. Cyprus shall implement the Action Plan for Growth with due consideration to the ongoing public-administration reform, the public financial-management reform, other commitments in Cyprus's macroeconomic adjustment programme and relevant Union initiatives, taking into account the Partnership Agreement for the implementation of the European Structural and Investment Funds. The Action Plan for Growth will be coordinated and enforced through a single body.’.