Cypriot president stands by beleaguered finance minister

NICOSIA, March 7 (Xinhua) -- Cypriot President Nicos Anastasiades on Thursday resisted strong pressure by opposition parties to dismiss his Finance Minister, Harris Georgiades, after he was named by an investigation panel as the man mainly responsible for the collapse of a nationalized bank.

Anastasiades said that he had full confidence in Harris Georgiades and implicitly dismissed the investigation panel's conclusion as to the causes of the collapse of Cyprus Cooperative Bank (CCB) at the end of August, 2018.

"I might have deemed the minister responsible had the collapse of the co-op been the result of delinquent loans amassed after 2013," Anastasiades said in a statement one day after the report was made public on Wednesday.

Citing excerpts from the report itself, Anastasiades said the record showed that CCB's demise was primarily due to the non-performing loans accumulated prior to 2013, a fact that rendered moot calls for the Minister's resignation or dismissal.

The report accused Georgiades of appointing an incompetent CEO at the bank after the state recapitalized it for a second time in 2015.

Anastasiades listed achievements by Harris Georgiades, which included the steering of the Cypriot economy out of utter chaos following the 2013 economic and banking crisis.

He also listed in favor of Georgiades the fact that EU institutions welcomed the sale of CCB to Hellenic Bank, as well as by international credit rating agencies, which upgraded Cyprus's ratings to investment grade as a direct result of the sale of the Cooperative Bank.

"In light of these, I wish to reaffirm the government's economic policies and to reiterate that the finance minister enjoys my absolute trust", Anastasiades' statement said.

The panel report had also assigned blame on the President for not dismissing Georgiades after EU supervisory authorities had warned of inadequate management of the Cooperative Bank.

Cyprus Cooperative Bank was made up of hundreds of village credit societies which were gradually created starting in 1904.

The Cooperative Bank was a social institution rather than a commercial lender. Local credit societies had the minimum of supervision, a fact that led to the looting of its assets by corrupt officials.

Its downfall started in 2012, when the government had to pump 1.5 billion euros (1.7 billion U.S. dollars) for its recapitalization that resulted in the nationalization of the lender.

European supervisory authorities tried to make a proper bank out of the collection of local credit societies after Cyprus was bailed out in a 10 billion euro package in 2013.

Local societies were merged to form larger branches with the purpose of a better supervision of the nationalized bank.

However, poor management and the fact that the bank had the largest ratio on non-performing loans, totaling 7.5 billion euros, which were owned by low income people, a social class which was mostly affected by the 2013 crisis, made its further operation unsustainable.

Though government plans aimed at an orderly sale of the bank to private investors, it had to sell it "at pistol point", as the state's Auditor General said when European bank supervisory authorities instructed Cypriot authorities to get rid of the bank in mid-2018.