Your Bank Sold Your Loan: What It Had to Do First

Borrowers usually find out that their loan has been sold when a letter arrives from a name they have never heard of, asking for payment into an account they do not recognise. The reaction is that something has been done behind their back.

Often something has been done that should not have been, but the useful point is narrower and much more valuable: the Sale of Credit Facilities and Related Matters Law, Law 169(I)/2015, gives the borrower a right to buy the loan before anyone else does, and gives it on a clock. Most borrowers never learn that until the clock has run.

Who is allowed to buy a loan at all

Section 4(1) is a closed list. A credit facility may be bought only by a credit acquiring company incorporated in the Republic or a foreign company that has established a place of business here under sections 347 to 353 of the Companies Law; a licensed credit institution; a credit institution authorised and supervised in another Member State and entitled to provide services or maintain a branch here; or a financial institution that is a subsidiary of a credit institution based in another Member State and operating here through a branch.

Anybody outside that list cannot acquire the loan. It is the first question to ask of a letter from an unfamiliar name, and it is answerable from public registers.

The forty five days nobody uses

Section 18(1) requires the seller to go through a procedure before the sale, and what it requires depends on whether the whole portfolio or part of it is being sold.

Where the whole portfolio is sold, section 18(1)(a) requires publication of the intention in the Official Gazette and in three daily newspapers. Borrowers, their guarantors and their security providers may then, if they wish, submit an offer to buy the credit facility being sold, within forty five days of that publication. The seller may also, if it thinks fit, notify the borrower by letter, but on a whole-portfolio sale that letter is optional.

Where part of the portfolio is sold, section 18(1)(b) is stricter. The publication is in general terms only and must not identify the facilities or the people behind them. But the seller must notify the borrower, the guarantors and the security providers by letter, and they then have forty five days from the date that letter was sent to submit an offer to buy.

Two limits sit on the right, both in section 18(1)(b)(iii). The offer may be submitted only once. And where no offer is made within the forty five days, it is presumed that neither the borrower nor the guarantors nor the security providers wish to make one.

This is the provision worth knowing before anything goes wrong. A borrower whose facility is about to be sold at a discount has a statutory opportunity to buy it at a price of their own proposing, and that opportunity closes by presumption rather than by refusal.

What has to happen after the sale

Section 19(2) is the provision most often breached in practice. Within fifteen working days of the transfer of the whole or part of the portfolio, the assignor and the purchaser must inform the borrower, the guarantors and the security providers in writing by registered letter that the credit facility and the related securities have been transferred. The purchaser must give the contact details of the people responsible for handling the transferred facilities and securities, and the new account numbers.

Section 19(3) requires more, and it is what makes the transfer visible on the public record. On the day of the transfer, or at the latest the next working day, the assignor and purchaser must jointly give written notice to the Registrar of Companies and Intellectual Property, the Department of Lands and Surveys, the Cyprus Stock Exchange and any other body with power to register securities, and to any other competent authority.

Section 19(1) deals with the borrower's personal data. Before the first announcement or disclosure of personal data of borrowers, guarantors or security providers, the seller must give the information required under Regulation (EU) 2016/679.

Set-off does not simply disappear

A borrower who has a deposit with the selling bank often assumes the right to set one against the other survives the sale untouched, or is lost entirely. Neither is automatic.

Section 25(1) provides that where the assignor is a credit institution, the terms of the transfer may include provisions so that a right of set-off between the credit facilities and credit balances held by the borrower with the assignor is created or preserved on the transfer. Where such a right is created or preserved, section 25(2) requires the transfer documents to describe the scope of the set-off precisely.

What that means in practice is that the answer is in the transfer documents, and the borrower is entitled to know what they say about it.

When the procedure was not followed

The obligations in sections 18 and 19 are obligations of the seller and the buyer, not courtesies. The Central Bank supervises credit acquiring companies and servicers under section 10, section 20 provides for administrative sanctions and corrective measures, section 21 for their imposition, and section 22 creates criminal offences.

Whether a breach affects the validity of the transfer as against the borrower is a different question from whether it exposes the parties to sanction, and it is not one to assume either way. What is worth doing immediately is establishing the facts while they can still be established: the date of any letter, the date of the publication, the date of the transfer, and the date the registered letter under section 19(2) arrived.

What to send us

Send the letter you received and its envelope, the original facility agreement and any restructuring of it, and details of any deposit you hold with the original lender. If a publication appeared, the date matters. The first thing we establish is whether the forty five day period under section 18 was ever properly opened, because if it was not, the position is different from the one the letter assumes.

Questions we are asked

Related reading

This work sits within our banking and fintech practice. Where the object is to restructure rather than to resist, see loan restructuring in Cyprus. Buyers acquiring property from a credit acquiring company should read buying property without a title deed.

This article is for general information only and does not constitute legal advice. Laws and their application can change, and individual circumstances differ. For advice on your own matter, contact Klitos Platis at klitos@kleanthousplatis.com or telephone +357 22 680 330.

Klitos Platis

Advocate, Partner

Kleanthous & Platis LLC, Nicosia · Published 16 August 2026