Cyprus Mail

‘Government cannot manage Cypriot banking’

Haris Georgiades

Opposition party Diko reiterated on Tuesday its demand for the resignation of Finance Minister Harris Georgiades over a damning report on the collapse of the co-op bank, otherwise there was a risk of political instability.

In a statement following discussion of the report on Tuesday evening, the party said the country’s credibility was at risk if Georgiades remained in office.

“It is obvious that the government cannot manage the severe problems in the Cypriot banking system and the economy as a whole,” the party said.

It called on the attorney-general to launch further investigations into the possibility of criminal offences being committed.

The co-op report, spanning over 800 pages, mainly blamed Georgiades for the collapse of the bank and its forced sale to Hellenic last year. It also recommended further investigation into the actions of former CEO Nicolas Hadjiyiannis and other executives.

Main opposition party Akel wrote to House President Demetris Syllouris on Tuesday requesting the findings be discussed in parliament.

“We think the contents of the findings in relation with such a fundamental issue for the economy and society is especially important, compelling its discussion as part of the parliamentary process,” the party said.

Georgiades meanwhile continued to resist calls to resign, arguing there was a difference in the approach.

“The government and I consider what happened positive,” he said of the sale to Hellenic Bank. “It was not a negative development. It was certainly a difficult decision politically.”

In an interview with Euronews on Monday, the minister said he understood the reaction but reiterated it was a necessary decision which has “bolstered our banking system” and prompted ratings agencies to place Cyprus on investment grade after a long time.

“This decision was welcomed by the European Commission, the European institutions, so it was a difficult, (and) favourable and for this positive decision of course we assume responsibility.”

The findings report also said €1.1bn in loans had been written off by the co-op bank as well as over 100m in loans belonging to politically exposed persons (PEPs).

The first names were leaked on Tuesday evening with Sigma television reporting two cases in which PEPs had seemingly been treated favourably.

According to the station, one case concerned two Akel municipal councillors in Achna who had applied for a €60,000 write-off out of a loan worth €110,000.

In their letter, the pair said the loan had not been taken out for personal reasons but for construction of a building to house the Achna People’s Organisations.

The Famagusta co-op eventually wrote off €54,000.

The report said the balance of the loan was repaid by Akel.

The second case concerns former Disy MP Christos Rotsas and two companies belonging to him which received €1.3m. According to a document presented by Sigma, Rotsas had €907,000 written off and he paid €143,500 in cash. He also gave the bank 11 properties worth €220,500.

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