Cyprus Mail

Finance minister to leave office at the end of the year (Updated)

Harris Georgiades said another key objective was to achieve full employment conditions by 2020

Finance Minister Harris Georgiades said Friday he would be stepping down at the end of the year but denied it was because of the demining findings of a probe into the collapse of the co-op bank, which he said were flawed.

“I have discussed with the president that I will continue at the finance ministry until the end of the year,” the minister told a news conference. “I think completing almost seven years at the finance ministry is enough for every person who assumed a responsibility to help during difficult times.”

The minister said his decision had nothing to do with the findings of a probe that held him mainly responsible of the demise of the co-op bank and its sale to Hellenic last year.

“My departure from the finance ministry is not expedited because of this report,” he said. “In fact, the co-op matter probably kept me here more than I would want.”

Georgiades, who has been credited for successfully steering the island through a bailout programme agreed in 2013, has resisted calls to resign, arguing that the sale of the co-op to Hellenic Bank was a successful outcome lauded by the EU and ratings agencies.

“I have achieved most of what I had set as my targets and what had been set as the objectives of the government’s economic policy,” he said.

The minister said the findings of the probe were unfair and wrong.

He said the committee’s key position was that the co-op had faced problems in the past but in 2013, due to the state assistance, it became viable and it should have never needed fresh capital again but the board had failed to manage the NPLs because it was incompetent.

In reality, Georgiades said, across Europe, in banks burdened with NPLs like the co-op was, there were successive capital increases because supervisory requirements constantly changed.

He said this was what happened in Spain, Greece, and Cyprus, where the Bank of Cyprus raised €1bn in fresh capital and Hellenic conducted three successive increases.

The investigating committee “ignores the fact that viability is one thing and adjusting to the supervisory requirements that do not remain static, another,” he said.

He reiterated that state assistance to the co-op had prevented a seizure of uninsured deposits and ensured capital adequacy in line with the requirements of the period.

Then the European Banking Union was created and capital requirements rose and it was inevitable that the co-op also needed fresh capital.

“The investigating committee ignores this fact, but it was key in defining the decisions taken by the government,” he said.

Of the committee’s finding that the co-op had failed to reduce its NPLs, Georgiades made a comparison with Alpha Bank during the period it was headed by Giorgos Georgiou, who was a member of the committee.

In three years, 2015-2017, Alpha’s NPLs rose from 61.2 per cent to 65.6 per cent while the co-op’s, for the same period, dropped from 59.5 per cent to 57.7 per cent, Georgiades said.

He said the co-op had hit its targets to cut NPLs to €6.5bn at the end of 2017.

“All these loans had been granted before 2013, but what is more important, the qualitative characteristics of this portfolio were the worst in the banking system.”

Georgiades also denied that the bank’s operational costs had not been reduced, arguing that from €190m in 2013 they dropped to €147m in 2017.

He suggested that he had been singled out and that the investigating committee had only scratched the surface of the state of affairs at the co-op before 2013.

The report “records examples of gross mismanagement and the possibility of offences. They are neither specified nor named. I suspect if anyone of them was my acquaintance, friend, or graduate of the same school as I was, they would have been named.”



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