By Patroclos
OUR DEPUTIES and political parties could always be trusted to come up with brilliantly popular ideas that are music to the ears of the majority of people. As long as these remain in the realm of theory, as topics of discussion for radio and TV shows we can all enjoy them and have a laugh.
But when deputies start taking these ideas seriously and start drafting legislation for their implementation, it is time to start worrying. Panicking can be put on hold until after the legislation is actually approved and there is nothing that can be done to prevent the destruction that it will wreak.
We are currently at just the worrying stage, regarding the EDEK-AKEL bill for the protection of the primary residence, because the vote is scheduled for Thursday and it could still be defeated. But if it is approved, crazier things have happened in the House, it would provide the legal grounds for people not to repay their housing loans.
The proposed law would set in motion a procedure for non-payment. A borrower would first be obliged to try to agree the restructuring of the loan with the bank, but if there is no agreement the dispute would be referred to some financial ombudsperson for mediation. If again there is no compromise he would be entitled to apply to the court for suspension of loan re-payments, for a specific period.
Nobody knows how long this procedure would take – one, two or three years – but while it is taking place no repayments would be made, as the borrower’s main argument is that he cannot pay the bank or co-op.
What is not clear yet is who would be eligible to apply to court. Would it be owners of homes up to a certain value or everyone? When the bill was being discussed at House legal affairs committee, several weeks ago, the representative of the state legal services said that even someone whose primary residence was valued at a million euro should be eligible to apply to court, because otherwise the law would be discriminatory.
I would guess the value stipulated by the law would have some relation to the value of the houses that deputies on the committee might be paying loans on.
NOBODY picked up the other aspect of the bill that is supposed to protect the poorest and most vulnerable members of our society. It will also prevent the foreclosure of properties occupied by small to medium enterprises (SMEs), defined as those with an annual turnover of up to €2 million, which covers about 90 per cent of businesses, many owners of which are neither poor nor vulnerable.
In fact they would be rich enough to hire an expensive lawyer to argue their case for the suspension of their loan repayments for a year or two at least. Speaking of lawyers, the law would generate plenty of new business for the legal profession which has been badly hit by the recession, even though helping poor and vulnerable lawyers was not the intention of our public-spirited deputies.
So why did the legal affairs committee want to protect businesses that might be housed in premises worth hundreds of thousands of euro? Why do the communists and socialists of AKEL and EDEK want to prevent insolvent businesses that cannot service their loans from going under?
The protection of SMEs was warmly embraced by committee chairman Sotiris Sampson, who has been championing the bill despite the fact that his party, DISY, is not keen on it. Of course this has nothing to do with the fact that Sampson, a lawyer, owns a heavily indebted publishing business for which foreclosure looms large.
OUR DEPUTIES’ pioneering efforts to boost NPLs and make Kyproulla, the only country in the world where individuals and businesses do not have to repay their loans, could attract many foreign businesses to our shores. The only weakness of this ingenious plan is that the banks do not have any money to give as non-repayable loans to new business. If deputies could draft a law to overcome this weakness, we would become a much bigger international business centre than we were before the haircut.
IT IS NOT only the legal affairs committee that is trying to help stricken borrowers. Another clique of politicians has been working feverishly behind the scenes to protect the poor and vulnerable big developers and hoteliers that have fallen on hard times and are unable to repay the hundreds of millions they owe the banks.
The biggest obstacle to their plan appears to be the uncooperative CEO of the Bank of Cyprus, John Hourican, who has been unwilling to do any favours to the poor and vulnerable big businessmen that have helped sink the bank and would rather it stayed sunk rather than have to sell off any of their assets that they used as collateral.
Attempts to undermine Hourican are taking place through leaks to the press accusing him of “suspicious and non-transparent actions”, regarding the sale of bank assets; he was keeping the board in the dark. There were also reports about the big fat salary he was being paid, but this failed to spark any reaction against him.
There has been talk that bank’s board, some of the Cypriot members of which are quite sensitive to the needs of the poor and vulnerable big developers, was considering appointing a deputy CEO to be in charge of the NPLs. The idea, reportedly, did not go down well with Russian directors and was abandoned.
INCIDENTALLY, the BoC board met on Friday to discuss the sale of its Ukrainian operations to Greece’s Alpha Bank. The board met in Strovolos which was a bit of a surprise. Perhaps the chairman decided against holding the board meeting in Kiev because of the unstable situation there.
THE RIFT between Hourican and the board was also evident some 10 days ago, after the publication of an interview he gave to Reuters in which he said that he was ready to look at the possibility of the splitting the BoC into a good and bad bank. He felt that this could work especially if private investors could be found to take over the bad bank.
A couple of days later, Phil reported that Hourican’s comments had taken some directors, who were in Moscow, by surprise as the issue had never been discussed at board level. Without naming any of the surprised directors, Phil wrote that the split was not an option is it was not included in the bank’s restructuring plans.
Even if Hourican had mentioned this in the interview to apply some pressure on the big borrowers who were refusing to co-operate with the bank, one of his directors that regularly leaks info to Phil, thought it fit to re-assure the poor and vulnerable developers/hoteliers that this was not an option.
WHAT the departing Governor Professor Panicos failed to do – closing down the BoC – might be achieved by our deputies, with a little help from the bank’s board. And if deputies pass their NPL-boosting bill, the co-ops might also go under because they have a very big share of the housing loan market. But now co-ops have lost their human face, nobody cares for them.
Of course Panicos could still have the last laugh, because the asset quality review and preliminary stress tests of the banks he agreed with the ECB does not offer much hope to the banking sector. His successor Chrystalla Georghadji, will now have the task of persuading the ECB that the professor’s calculations were wrong and that the data needed to be changed.
If she persuades the ECB it would be a big success, but if she does not it would be a case of mission accomplished for the professor as he would have achieved his objective to destroy the Cypriot banks.
SPEAKING of Chrystalla, the weekly Kathimerini, has been expressing its embarrassment over the new Central Bank Governor’s lack of qualifications. A couple of weeks ago, a columnist wrote that, looking through the CVs of all Central Bankers of the Eurozone countries, there was not a single one without a doctorate.
He wrote: “But now, the ECB could boast that it has as a member of its council Chrystalla, almost without a basic degree. Is Argentina a better under bankruptcy country than us, where its central banker did not finish school?” The columnist could not hide his grief over the departure of Professor Panicos, who had given a lot of business to the newspaper’s Limassol-based benefactor.
As for the qualifications, Panicos’ spell at the Central Bank is emphatic proof that no matter how many doctorates, professorships and published articles someone has, he could still be a lousy governor. Ttooulis Ttoouli also had a doctorate.
AFTER its glossy magazine about the challenges of tourism, sponsored to the tune of 35 grand by the CTO, and the about about the challenges of 2014 sponsored by the Bank of Piraeus, Phil published yet another glossy mag last Sunday.
The latest, described as a ‘Collector’s Edition’ was titled ‘They Endure and Persist’. It featured 70 important companies that dynamically declare their presence’ one year after the Eurogroup. It was sponsored by the BoC, which despite its difficulties can still waste money funding Phil’s cash-generating schemes. Interestingly, it sponsored a magazine promoting some of its direct competitors, which is not very smart.
The question some people were asking was, how did Phil choose the 70 important companies that ‘endured and persisted’? It was really very easy. For €700 a company was given two pages in the ‘Collector’s edition’ to write whatever it wanted about itself.
THERE is no end to the pandering of Mother Russia by our politicians. Ten days ago our foreign minister Ioannis Kasoulides went to Moscow to see Foreign Minister Sergei Lavrov and assure him that we were by our Mother’s sides. He was the first foreign minister of an EU member-state to visit Moscow after the Crimea crisis.
As Phil reported, this was greatly appreciated by Moscow as it “sent a message to third parties who had tried to isolate Russia.” There was more good news this week for President Putin. An AKEL delegation, headed by our heavyweight, former president, Comrade Tof would also be heading to Moscow for a meeting with Lavrov. I think we should offer Tof to our Russian brothers to keep, as a token of our appreciation for their unwavering support and as a message to third parties that we have a sense of humour.
IF CHEAP populism could be monetised we would have the strongest economy in the world and turtle-lover Giorgos Perdikis would be richer than George Soros.
This week, the holier-than-thou tree hugger, responded to Chrystalla Georghadji’s exhortations to the House not to pass the primary residence bill by saying that “the message must be sent in every direction that the House has the guts to protect citizens.”
He also came up with a confidence building measure. He urged the government “to promote and adopt the confidence-building measure allowing all Kyrenia residents to return to their homes before a settlement of the Cyprus problem.”
PERDIKIS was outdone by another Yiorkos in the populism stakes this week. Alliance of Citizens’ leader Lillikas yesterday urged Prez Nik to ask Stefan Fule, the European Commissioner for Enlargement, who is scheduled to visit Cyprus tomorrow, for €10 billion in financial assistance.
It was time for the government and the Commission to cut out the wishful thinking and took action, Lillikas declared. Nik “should show Fule, with documentation that the Commission should provide 10 billion euro to support small to medium businesses.” The documentation could be that if the Commission did not give us 10 billion, we would send Comrade Tof to Brussels.
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