By Angelos Anastasiou
THE House Legal Affairs committee has voted to bring a bill protecting the primary residence and small-to-medium business premises from foreclosure to a plenary vote on Thursday, despite a last-minute appeal by the incoming Governor of the Central Bank to postpone the vote.
In a scheduled meeting yesterday morning, the committee convened to review the finalised draft of the bill before putting it to a plenum vote on April 10. But the new Governor of the CBC Chrystalla Georghadji, who takes office on April 11, was called to appear before the committee in order to explain the risks associated with the proposal.
Georghadji cited the upcoming stress tests to be performed by the European Central Bank on all systemic banks in the Eurozone, including the Bank of Cyprus, Hellenic Bank and the Cooperative Central Bank.
She said an asset quality review would precede the tests, and voting this bill into law would mean lower valuations of collateral eligible for protection, adversely impacting banks’ balance sheets and possibly pushing lending margins down and interest rates up.
She also voiced the troika’s objection to the bill, presenting the committee with an email sent to Finance Minister Harris Georgiades from the European Commission, by which the Troika clarified that, while it was true that it wished to avoid mass foreclosures, it did not favour the passing of this bill.
“Don’t pass it now,” she pleaded with the committee members. “The timing is not good.”
Georghadji even tried to put the full weight of her personal credibility behind her request, citing the long and trusting relationship she had developed with the House as Auditor General.
Her objections echoed a warning issued to the committee by the finance minister in a letter dated March 4.
In it, Georgiades had urged the committee to refrain from pressing ahead with its bill as it was considered an isolated proposal that failed to address the risks posed to banks, and advised them that the government was in the process of preparing a comprehensive bill that would address all issues relating to insolvency later in the year.
“With this proposal and its possible approval I doubt there will again be a Cypriot bank that will give a housing loan,” Georgiades said yesterday. “Everyone’s aim should be to restore the Cypriot banking system’s capability to afford loans to the economy and households.”
The bank association also disagreed with the bill.
But all appeals were ignored as the committee voted to put the bill to a vote on Thursday.
The committee argued that, while respecting Georghadji’s positions, they felt that her concerns would be fully addressed in the bill’s final draft. The final touches to the proposal, relating to maximum limits on the value of properties eligible for protection and the moratorium periods, will be added on Monday.
The decision raises questions as to the stance of committee members who belong to the ruling party DISY. Committee chairman Sotiris Sampson and member Rikkos Mappourides – DISY deputies – also voted in favour of pressing ahead with the bill despite his party’s pro-postponement position. Following yesterday’s committee session, DISY leader Averof Neophytou posted a message on Twitter that fell short of naming names but raised the issue of party discipline.
“DISY’s official position is in favour of postponing discussion of the primary residence bill. Any other position does not represent the party,” Neophytou’s tweet said.
But while Mappourides issued a statement later yesterday explaining that although he opposed the timing of the bill he voted for its submission to the plenum because “the majority on the committee was in favour,” Sampson made no attempts at diplomacy. His position was that Georghadji’s concerns would be fully addressed in the finalised bill, which he appears to support despite his party’s opposition.