A bank cannot dish out €100m in voluntary redundancies and pass that cost on to its customers “the next day” by massively hiking charges, ruling Disy leader Averof Neophytou said on Tuesday.
Speaking after a meeting with the leadership of the bankers’ association, Neophytou renewed his call, and that of other MPs, for the Bank of Cyprus (BoC) to rescind its new charges, which they say will hit vulnerable groups the most.
Neophytou said he did not specifically discuss the new BoC charges with the bankers’ association because this had been an action by an individual bank and not the association as a whole.
However he was adamant he would not drop the issue and repeated that the power of the legislature should not be underestimated.
Neophytou said there could be no strong economy in any country in the world without a strong and stable financial system, reiterating his party’s position that supporting the sector was directly linked to the stability of the economy and the country as a whole. He also stressed to the head of the bankers’ association that there was an obligation of social responsibility for businesses.
On the bank charges, he said his position remained unchanged since last week that the charges can’t be imposed, and again urged BoC to withdraw its decision.
“It would be honourable to show the least amount of social sensitivity when they decided to disburse more than €100m for early retirement plans. It is their right as a private organisation but to not the next day to double and triple charges that affect the most vulnerable strata of our society,” he said.
Commenting that banks are private organisations and it would be inappropriate to intervene as a political leader into their pricing policies, Neophytou questioned how private were banks in Cyprus, given the number of times they’ve had to be bailed out by the Cypriot taxpayer, their own depositors and shareholders in the last six years.
In addition to the bail-in of depositors, there were at least three bailouts by taxpayers “which may have gone unnoticed”.
Asked to be more specific, Neophytou cited the co-op bailout in 2013, the second being the merger of the co-op with Hellenic Bank, which may have been an even bigger bail-out. He also said the Estia debt-relief scheme “even if it does not work as well as we would like”, was also a bailout.
Quizzed as to how the parliament could exert pressure if the bank does not comply, Neophytou said the power of the legislature was not the power of blackmail but of persuasion.
“I will insist and we will win for the citizens,” he said.
Asked where he was when the banks were imposing high charges in the past, Neophytou said at the time MPs had to take responsible positions to support the banking sector because there was no other way.
“I didn’t do it for the bankers. I did it for the economy, and if there had been no responsible positions taken inside and outside the House, today we wouldn’t be talking about a growth economy, we wouldn’t be talking about a banking system that is on a steady course,” he said.
He added however, that it was the duty of every legislator to pledge protection for depositors because loans “do not come from bankers’ money but from depositors’ money”.
The Central Bank (CBC) is currently examining the new BoC charges and will submit a report to the finance ministry in January. Under the law the CBC can carry out such reviews if it is felt that vulnerable groups might be affected by such fees.