Insider Economy Cyprus banks must shrink further and lay off staff, says Finance Minister

Cyprus banks must shrink further and lay off staff, says Finance Minister

Finance Minister Harris Georgiades has made clear that the rebirth of the collapsed Cyprus Co-operative Bank is out of the question.

Because, he explained to MPs yesterday, the government cannot and will not proceed with any such action or invest in any bank due to supervisory restrictions.

He also told House Committee on Development Plans and Public Expenditure Control members who raised the issue again exactly a year after the peoples’ lender went down that they could take the initiative to set up a new Co-op bank.

Yesterday’s meeting was also attended by community leaders protesting against the closure of former Co-op branches in the countryside after the take-over by Hellenic Bank. The full integration of the two banks’ system was only achieved a few days ago.

The Minister went as far as to tell MPs that if parliament puts forward a proposal for the rebirth of Co-op bank he himself would forward it to the Attorney General’s office for advice on whether such a move could be in harmony with the Republic’s constitution and that of the European acquis.

Left-wing Opposition Akel MP Stefanos Stefanou argued that  when the Government calls on Parliament to legislate on the setting up of a Co-op bank this simply means that it is trying to avoid its own obligations and responsibility. Centre Diko MP Panicos Leonidou went a step further saying the House would not replace the job of the Executive.

At the same time, the Minister also said that banks operate under a specific supervisory framework and that the demand now is for the number of bank branches and of staff to be reduced. There are currently 386 bank branches operating in Cyprus, compared to 923 that was the case 10 years ago.

Cyprus is placed fourth in Europe in terms of the number of bank branches per capita and third when it comes to the number bank employees. Georgiades said one bank employee corresponds for 97 citizens, and that although the number of branches has been reduced, European supervisors are still calling on Cyprus to align itself with the European average.


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