Panel report blames Cyprus FinMin for bank collapse

NICOSIA, March 6 (Xinhua) -- Cyprus Finance Minister Harris Georgiades, the man generally credited for steering his country's economy out of utter collapse in 2013, was named as the main culprit behind the collapse of a bank last year in a panel report released on Wednesday.

In the 800-page report prepared by a 3-member probe panel following a seven-month hearing, Georgiades is blamed for having appointed his "incompetent" friend Nicolas Hadjiyiannis as CEO of the Cyprus Cooperative Bank (CCB), and above all for not removing him despite "repeated, and sometimes strict" warnings.

The report suggests that Hadjiyiannis and other former top executives of the doomed lender should be further investigated by the police for possible criminal wrongdoing.

The CCB, which was made up of hundreds of village cooperative credit societies set up gradually since the first one came into being in 1904, was sold to Hellenic Bank and ceased to exist on Aug. 31, 2018, after two recapitalization rounds by the state.

The report says that setting CCB back on a sound footing after the 2013 banking crisis was a difficult task, but it could have been managed had it been placed in the hands of skilled, experienced and exceptional people.

"This is exactly where the majority shareholder, the owner (of CCB) failed ... The owner was the state represented by the finance minister, who essentially had absolute control of the situation. It is not a coincidence that two of the senior executives were his close friends," the report says.

It also blames President Nicos Anastasiades for not dismissing his minister of finance after European supervisory authorities had issued numerous warnings, having lost confidence in and patience with the bank.

"The finance minister's wrong and unfortunate handling prompted a continuous reaction by the supervisors and exacerbated the loss of confidence," the report says.

The government has not commented on the report, saying that the president was abroad on an official visit to Britain.

Georgiades himself did not comment directly on the report, saying only that the government had been called upon to manage a chronically toxic situation and had made difficult decisions, which secured confidence and stability, and bolstered the economy.

He was alluding to the purchase by the state of CBC's non-performing loans - a move that was welcomed by rating agencies as a stabilizing factor for the economy and its prospects.

However, the panel report suggests that the minister's appointee to the CEO post could bear civil and criminal culpability over various actions he undertook while in that post, such as the direct appointment of the Spanish asset management firm Altamira to manage the bank's non-performing loans.

"We believe that Mr Hadjiyiannis is possibly responsible for the commission of offences that could be uncovered after an in-depth investigation by police," the report says.

"Hadjiyiannis completely failed to run the bank with prudence so as to achieve a reduction in non-performing loans and a reduction in operational costs, two targets that, based on the terms of its restructuring, had to be achieved for the lender to have any prospect of survival," the report explains.