OUTGOING CEO of the Bank of Cyprus, John Hourican, was scathing about the populism of the political parties in an interview he gave to the Associated Press this week. Hourican, whose bluntness is a breath of fresh air in a country in which most public figures talk blandly about everything for fear of causing even the mildest offence, lambasted the political parties for delaying the passage of the foreclosures bills that would have allowed the banks to tackle non-performing loans.
And when the foreclosures bills was passed, the parties had watered it down so much that it was not as effective a tool for reducing NPLs as it should have been. He told AP it was ‘embarrassing’ for him to explain abroad the actions of the legislature in relation to the foreclosures law. Even now that the law had been passed, deputies’ populist rhetoric was encouraging borrowers not to agree to the restructuring of loans in the hope of securing a better deal.
He said: “The parliamentarians have decided heading into an election year that it’s good to raise populist measures and what they’re doing is driving up delinquencies and not helping us fix them. I would like some maturity and responsibility taken in helping the country.” Nobody has dared to speak so bluntly about the populism surrounding the NPLs, which has created the impression that borrowers refusing to repay their loans were victims of the banks that needed to be protected.
But it was not only the political parties that were engaging in this populism. Last Sunday, President Anastasiades announced that the banks might have to take a hit from NPLs, suggesting they should be “prepared to accept reductions or discounts on loans.” His finance minister Harris Georgiades tried to put things right, a day later, saying the president meant something completely different – that the banks needed to achieve “viable restructuring of loans.”
After Anastasiades’ meeting yesterday with the heads of the banks it appeared Georgiades was right and the president did not really mean what he had said on Sunday. Everyone agreed that the restructurings of NPLs should be speeded up and there was no mention of loan reductions. The drive to reduce NPLs, said the government spokesman, would work on three levels – helping borrowers from vulnerable groups, arranging viable restructurings so that loans could be repaid and using all legal tools to force defaulters that have money to repay their loans.
We do not know whether it was a coincidence that Hourican’s interview with AP was put out a few hours before the presidential palace meeting, but whatever the case it ensured no populist announcements were made. Of course this does not mean the political parties would give up their populist campaigning in support of those not paying.