Finance Minister Makis Keravnos appears to have made it his mission to put Cyprus’ banks under his control, even though he has no such authority. The latest idea he has been toying with – although he stressed it was just an idea – was to impose a windfall profits tax on the bank, because their earnings had been given a big boost by the rising interests rates over the last year or so.

Keravnos seems determined to punish the banks for largely ignoring his pleas to absorb part of the cost of the rise in interest rates to help out households and businesses that had loans. Some small measures were taken by banks, which reportedly ruled out the possibility of any more after receiving the latest letter – the third – about interest rates from the minister.

Speaking on Antenna TV, Keravnos said the banks responded negatively to his third letter, so the ministry had to consider what measures it could take. “You cannot have a healthy banking system in a destroyed economy.” This is the type of comment you would expect from a mindless, bank-bashing politician, rather than from the finance minister, whose responsibility is the smooth operation of the economy.

Does Keravnos seriously believe the economy will be destroyed if the banks do not cut their interest rate gains, or was he irresponsibly pandering to the anti-bank sentiment of the electorate and the parties? And is a one-off, windfall profits tax justified, considering the banks have been making losses for the last decade because their liquid assets at the ECB were earning negative interest? During this time, they still had to pay a 0.15 per cent levy on their deposits which earned the state between €40m and €50m a year.

There are other points the minister should have also considered before engaging in this populism. The share of Cyprus banks still not rated as investment grade by ratings agencies – non-performing exposures may have been reduced to about 4 per cent from 40-plus per cent, but the average for European banks is about 0.5 per cent. Without healthy profitability and strong capital base, ECB could once again ask banks to make provisions.

Who would invest in Cyprus banks, when the government, on the one hand, wants to get its hands on their profits and political parties, on the other, are at pains to suspend the foreclosures law? It is almost as if the government cannot tolerate the new-found, financial health of the banks, which has been assisted by the surge in interest rates. Keravnos also seems to ignore the reason the ECB has been raising interest rates – to battle inflation.

It is time for the finance minister to stop pandering to the anti-bank populists. He should be safeguarding the stability of the banking sector instead of acting like some Marxist rebel that wants to punish the bad banks. The reality is that even if he decided to go ahead with the windfall tax, the ECB would most likely block the move, as it is more committed to banking stability than our government.