Cyprus Mail

MPs squabble over 2108 co-op-Hellenic deal

Hellenic Bank and Bank of Cyprus get a boost from Moody's.

A relatively inconsequential regulation discussed in parliament on Monday served to reignite controversy over a 2018 deal where the state-owned cooperative bank was sold to a private lender.

Lawmakers were looking into a government regulation that needs to be passed in order to lock in the transfer of some €23 million from the co-op’s deposit guarantee fund, to the general deposit guarantee fund for all banks.

Unless the item passes by June 24, the €23m will be diverted to Hellenic Bank instead.

Under a June 2018 deal between the co-op and Hellenic – which saw the latter absorb the former’s ‘good’ assets – any cash in the co-op’s deposit guarantee fund would go to Hellenic within two years unless otherwise specified.

The two years are up on June 24.

Dionysis Dionysiou, a non-executive member of the board of directors of Kedipes – the company set up to manage the co-op’s non-performing assets – urged parliamentarians to pass the item as soon as possible.

He said that every three months since late 2019, Kedipes has been making payments to the state, repaying the state assistance given to the co-op as part of the sale to Hellenic.

Kedipes has made three payments to date: €60m in October 2019, €60m in December 2019, and €30m in March 2020.

Main opposition Akel demanded that, since the government is now asking for the regulation to pass, it must furnish the full text of the 2018 agreement between the co-op and Hellenic so that MPs can finally scrutinise it.

The deal was never made available to legislators as it was deemed a private agreement and thus confidential.

Akel MP Stefanos Stefanou recalled how, last September right after Hellenic posted profits, his party queried the government as to whether taxpayers would pay something.

The government had said ”No” at the time, he said.

“Once again parliament is being asked to approve a transaction which comprises a clause in an agreement that it never presented to us. It is not enough that the government, rather than salvaging the cooperative bank, rescued a private bank [Hellenic] through a secret deal- and we are still paying for it,” said Stefanou.

His party also called on the finance ministry to formally reiterate whether deposits up to €100,000 are guaranteed.

In June 2018 the co-op agreed to sell its operations to Hellenic after its failure to reduce its stock of non-performing assets stock practically forced it out of business.


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