Cyprus President expresses “full confidence” in Finance Minister

Cyprus President, Nicos Anastasiades, has expressed his full confidence in Finance Minister Harris Georgiades after a Committee of Inquiry on the demise of the Cyprus Cooperative Bank found that Georgiades had the biggest responsibility.

The CCB, Cyprus second largest lender which was bailout by the state in 2013 and in 2015 with Euros 1.7 billion, was split between a bad bank and a good bank, with the latter sold to Hellenic Bank, which paid the state with Euros 74 million and received a balance sheet of Euros 10.3 billion.

It is not my intention for the time being to comment in detail on everything written in the report, President Anastasiades said in a written statement yesterday evening, adding that he expects that the Attorney General will review its content and will take the necessary steps according to his judgment.

On the political blame which the report attributes, he refers to six points.

He notes that in 2013 the Cooperative sector was in a state of bankruptcy and full collapse. The sector had non-performing loans of the order of Euros 7 billion, which had been created before 2013, through dubious and often scandalous procedures as the Inquiry Committee finds, he adds.

President Anastasiades also says, one of the terms of the Memorandum of Understanding signed between Cyprus and its international lenders (EC, ECB, IMF) in 2013 was that the Cooperative institution would be restructured and turned into a bank and would at the same time start to be supervised by the European Central Bank.

Thirdly, he continues, despite all efforts to reduce non-performing loans, more strict rules were adopted by the Single Supervisory Mechanism which had to do with events in relation to events before 2013 and the problematic nature of the non-performing loans, which in turn led to taking further measures.

As an inevitable outcome and following the intervention of the SSM, the decision made by the government last June to split the Coop’s assets and sell part of it to the Hellenic Bank was necessary, he notes.

President Anastasiades further notes that this decision was adopted but also welcomed by the SSM, the ECB and all European institutions in general, while it was also seen as a positive development by international ratings agencies and the international financial community.

In particular, he points out that international ratings agencies, have used the sale of the cooperative sector as a reason for upgrading the Cypriot economy, which finally made it to the investment grade.

According to Cyprus’ President it is evident that the Finance Minister was called upon to make responsible decisions in order to avoid a disorderly bankruptcy of the Cooperative secto,r something the Committee itself notes in page 171 of its report where it says that the Republic of Cyprus was obligated in 2013 to make the disbursement of Euros 1.5 billion to recapitlise the Cooperative Credit Sector in order to prevent its collapse, due to lack of capital which led to a great percentage of non-performing loans.

Loans, he adds, the obligations of which could not be met due to the scandalous procedure through which they had been granted, as the Committee finds in page 173, which also played a crucial role in the SSM’s intervention of January 8, 2018.

President Anastasiades further underlines tha,t by adopting the Finance Minister’s proposals, the government managed to protect deposits, guarantee the staff’s jobs and working rights, protect the Cooperative sectors assets which are expected to contribute in regaining a significant part of the state assets which had been given and to internationally enhance the Cypriot economy’s credibility.

I would consider a request for the assumption of political responsibility on the part of the Finance Minister absolutely well founded if I overlooked his role in: preventing the disorderly default of the state, in a quick and successful exit from the MoU (economic adjustment programme), the creation of budgetary surpluses, the great reduction of unemployment, achieving continued growth with one of the highest rates in Europe, he points out.

Even then, he continues, I would still consider that the Finance Minister bears political responsibility if the Cooperative sector’s collapse was the result of non-performing loans which were made after 2013 and not as a result of NPLs which had been amassed until 2013.

In light of the above, I wish to reconfirm the government’s political direction in the economy sector and to reiterate that the Finance Minister enjoys my full confidence, he concludes.

Source: Cyprus News Agency