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Our View: Separating banks from politicians is a good thing

Under fire Bank of Cyprus CEO John Hourican

ABOUT a week ago an internal email, in which Bank of Cyprus CEO John Hourican was openly questioning the motives of the political parties in blocking the foreclosures law was made public, sparking a political uproar from the parties. Hourican had claimed it was a scandal that some politicians were “pretending to be protecting the more vulnerable in society against the ‘bad banks’ when really they are protecting the larger businesses in Cyprus.”

While this view had been expressed in the media in the past, the parties had not deemed it necessary to respond. But when their motives were questioned by a top banker, the good work of whom at the Bank of Cyprus, in very difficult circumstances, most people acknowledge, the parties felt obliged to go on the offensive. All issued statements, along the lines that the banks had got the country in the mess it was in, could not be trusted and had no interest in protecting the small borrowers. Some made their attacks personal, doubting Hourican understood the economy’s problems, because of the time he spent abroad.

It was the simplistic mix of intimidation and moralising which the parties always resort to when they want to impose their views. Hourican did not have the right to express such views because he was a banker and did not have as his mission – in stark contrast to the parties – the protection of the people. This is the usual nonsense served by politicians who never thought of protecting the people when Andreas Vgenopoulos was plundering Laiki Bank’s assets, as he had made generous cash donations to the parties. They all pandered to him as they did to Bank of Cyprus’ then CEO Andreas Eliades.

This unhealthy, cosy relationship between the bankers and the politicians has ended. The two main Cypriot banks are now under the control of foreign shareholders and run by foreign chief executives who are not – nor do they seem to want to be – part of the local ruling clique as their predecessors had been. When the new board of the Bank of Cyprus was elected in November, the last remaining party placemen had been removed, thus cutting all links between the bank and the parties and eliminating the control exercised by the latter.

This was the best thing that could have happened to the bank, even if it meant it would occasionally come under political fire, as Hourican found out last week. Cyprus is still suffering the consequences of politicians and bankers being in alliance, so it is a positive development having them in opposing camps.

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