Co-op outflows cease after House passes NPL laws (Update-2)


(Updates with fresh finance minister comment in first paragraph)

By Stelios Orphanides

Finance Minister Harris Georgiades said that deposit outflows at the Co-op have “essentially” ceased after parliament paved the way for the completion of Hellenic Bank’s deal with the bailed-out lender.

The finance minister who was commenting a day after parliament approved the extension of government guarantees to Hellenic Bank and a bundle of draft laws to speed up foreclosures, said that what follows is the establishment of a non-performing management body which will manage the Cyprus Co-operative Bank’s non-performing loans.

“The management will be carried out by a specialised foreign company and revenue is expected to be considerable and as a result, the budget is expected over the coming years not be burdened but to be strengthened rendering (public) debt management sustainable,” he said. “This positive prospect is already reflected in market reaction”.

As a result of the Co-op’s slow progress in reducing its non-performing loans over the past five years, the bank had to increased its provisions for loan impairments which ultimately wiped out its capital. Concerned depositors withdrew €2bn in the first quarter of the year and continued to withdraw their funds on fears parliament could block the deal between Hellenic Bank and the Co-op.

Earlier, in comments made to state-radio CyBC, the finance minister said he offered President Nicos Anastasiades his resignation days ago after opposition politicians asked for the assumption of the political responsibility for the Co-op’s failure.

“I am ready to leave my post to facilitate the government’s work,” Georgiades told CyBC.

“The President (already) replied to me, but I will not convey the content of the conversation,” Georgiades said. “It is up to the President to decide, not the opposition”.

Hours later, President Anastasiades said the resignation of his finance minister would not be justified, as Georgiades continues to enjoy his trust.

Diko, which on Sunday helped Disy form a majority in parliament to pass the new legislation and approve the issue of government guarantees to Hellenic Bank, was one of the political forces that demanded resignations following the agreement of state-owned Co-op with Hellenic which provided for the transfer of its operations to the latter. On Tuesday, the board of directors of the Co-op quit.

The guarantees, part of Hellenic Bank’s agreement with the Cyprus Co-operative Bank to acquire the latter’s operations, will allow the completion of the deal while the laws are a condition set by the European Commission’s competition watchdog to approve the agreement.

“The legislative framework is getting more effective and fairer,” the minister said. “The margins for strategic defaulters to take advantage of the system are limited. On the other hand, the expansion of the insolvency framework and the preparation of Estia which potentially covers almost half of the non-performing loans with a primary home as collateral, offers sufficient security”.

“The decisions that were ratified yesterday by parliament not only cause no problem but will liberate the economy from the last remaining problems of the crisis,” said Georgiades, who faced criticism in the past over the appointment of his friend Nicholas Hadjiyiannis as chief executive officer of the bank, which taxpayers recapitalised in 2014 and 2015 with almost €1.7bn.

“Our banking sector is definitely stabilised,” the finance minister continued adding that depositors were now “fully guaranteed”.

On Sunday parliament passed in an extraordinary plenary session a bill which provides for the fragmentation of a mortgage to cover several other lesser loan agreements so that no loans remain unsecured when the collateral becomes property of the buyer of a loan.

Another law passed exempts the buyer of a loan from transfer fees resulting from the transfer of collateral and regulates several other aspects including the transfer of rights and obligations, priorities, the continuation of lawsuits and the storage of documents.

Other bills expand the coverage of the insolvency legislation, increase the reward of insolvency consultants in case of successful mediation, encourage corporate debt restructuring and introduce the securitisation of loans.

The parliament also rejected amendments to the above bills proposed by opposition parties and passed two bills proposed by the chairman of Disy Averof Neofytou.

The first bill provides that the revocation of a cooperative bank’s licence will not immediately result to its resolution, leaving it to the discretion of the Central Bank of Cyprus to seek a relevant court order. The second allows the Cyprus Cooperative Bank to manage assets in its possession to secure liquidity.

The two bills will allow the legacy Cyprus Cooperative Bank to operate as a bad bank following the completion of the agreement with Hellenic which provides for the transfer of €4.6bn in performing loans, €4.1bn in government bonds, €1.6bn in cash, €9.7bn in customer deposits and other current liabilities and assets.



About Author

Stelios Orphanides is a journalist at To contact Stelios Orphanides: [email protected]

  • Bob Ellis

    Got the pensions, carry no accountibility or responsibility so time to move carriages on the gravy train. As far as everyone is concerned this episode of the financial collapse if over, time to move on to the next disaster. Bank of Cyprus next ? Crisis 2 ? or another flirtation with Putin ? Maybe Chrystalla can come out of the shadows to claim yet another pension as Finance Minister. Whatever happens next we can be assured it will cost Cyprus dearly and hasten the ruination of the Republic, with the people in a languid stupour applauding as usual.

    • Neroli

      And why not applaud, they got 50% of their loans paid kept the house and assets, they must be laughing all the way to the bank! I’m amazed at Harris!

      • Bob Ellis

        …and any credibility that Cyprus has left disappears round the u-bend! Just wait for the terms of the next bailout.

        • Neroli

          I believe that Cyprus has lost all credibility !

          • A is B

            Never had any in the first place.

    • Mike

      Agree with most of what you say but not all of the people are in a languid stupour and applauding. Some of us (too much of a minority) want to facilitate progress, transparency, accountability and an ethical environment but the self interests and greed of others seems to hold us back.

      • Bob Ellis

        Being sarcastic, ever pushed water up hill ? Was involved in clearing rubbish in Cyprus for 10 years. Gave up, flogging a dead horse. Offering free business advice for 12 years. Gave up, flogging a dead horse. Animal wefare 12 years. Gave up, seen too many flogged horses.

  • A is B

    Off you go to your dacha then, dont come back.

  • Barry White

    His resignation will signal the next total ROC collapse. He should have quit for a top job overseas 2 years ago. Now, his reputation is tarnished. Still, a place will be made for him.

  • Ιοαννις Γεωργιου

    European commissioner of economics and finacial affair in the EU is a much more fiting job for Harris, espesially after the dazzling conclusion of the coops problems , he can always be assisted by the known trio, Irena Hadjiyiannis and Savia and offcourse Moscovici is allready bathing in cold sweat

  • Mike

    I hope he stays, his is one of the small handfull of voices that see the bigger picture just a shame he is sometimes forced by party policy.

    • John Henry

      Forced by party policy? That’s called self interest I’m afraid. Don’t give him a break.

    • Neroli

      He was the Finance Minster, why didn’t the Coop Bank come under the CBC not that it would have made much difference they didn’t do much with Laiiki or BoC! But I always hoped he would run for President

      • Philippos

        Co Op wasn’t a BANK. It was a credit union, so no CBC Regulation / Supervision. also no Banking Experience before trying to play with the Big Boys, where it all looked so easy. Lent to each other on silly terms, couldn’t recoup the money again through inexperience and absence of suitably qualified people. It must have been the Government who should have been “Monitor” and they didn’t. RESULT: As you can clearly see. FIX: No! just plasters, as you will clearly see.

        • Neroli

          Oh! The big boys weren’t banks either!

    • Evergreen


  • John Henry

    Harry, the biggest let down of em all! Collect your pension and head off to the beach to begin your new gig on stage with the Village Idiot and every other shyster who played a role in the destruction of Cyprus; acting like you had nothing do with it.

  • Kevin Ingham

    “The decisions that were ratified yesterday by parliament not only cause no problem but will liberate the economy from the last remaining problems of the crisis” Really??

    So having done nothing to alleviate the Co op predicament in 5 years that has cost Cyprus about Euro 5 billion, (with power to add) and having helped pass just abut the silliest write-off of loans I have ever heard of (to be paid by the banks other customers and the taxpayers) he reckons he’s leaving a job well done with nothing else to go wrong. Oh dearie me

  • Mist

    Have the banks agreed to the interference in their contracts?

    • Barry White

      This looks like a short running stumble to ‘out of money’ redux.

      The EU will steadily move into action as the bank runs will accelerate, the interference with contractual law will be swatted down as well as the illegal bank support to say nothing of the discrimination against foreign depositors and loan holders.

      Nothing other than a full conservatorship of the massively failed ROC by foreign entity and persons will assist.

    • Pc

      What interference do you refer to?

      • Mist

        A cut in the amount owed of the contract signed.

  • Neroli

    Outflows have ceased as there’s not much left. Why not tell us in total how much has flown the nest in the last few weeks

  • comments-on-mail

    A Minister who was ready to rightfully shoulder the burden of an economic debacle. A benevolent President who would not let facts such as a multi-billion economic disaster get in the way of a good succes fairy tale, according to which the Minister is his shiny armor brough growth and prosperity to the Kingdom of Credulity. And the Oscar goes to.