EU says new Cyprus laws clash with rescue deal

The European Union is warning Cyprus that it may be flouting the terms of its multibillion-euro rescue package after the country’s parliament approved legislation softening a crucial foreclosures law.

Though legislators have approved a law that significantly cuts the time banks need to seize and sell off property in order to tackle a huge number of bad loans, they backed several other measures that give additional cover to borrowers, including writing off the outstanding amount of a loan once property is foreclosed on.

Simon O’Connor, a spokesman at the European Commission, said on Wednesday that some of those laws “aren’t compatible” with the bailout’s terms.

He said euro-area members will hear how Cypriot officials plan to deal with this at a meeting on Friday of the currency zone’s finance ministers.

[AP]