Finance Minister Harris Georgiades said on Monday that yesterday’s approval of state guarantees for Hellenic Bank’s deal with the Cyprus Cooperative Bank has ended the outflow of deposits from the CCB.
Uncertainty last week had led to a mini bank run on the CCB which lost an estimated €500m in deposits in one week alone.
He acknowledged that the decisions taken on Sunday had been difficult ones, particularly as regards the co-op but said he was convinced they would lead to a stronger banking system. “Already from the morning the outflow of deposits have effectively ended with their imminent takeover by Hellenic Bank, which will be boosted with new capital,” he said.
In statements at the Finance Ministry on Monday, Georgiades said that the House decisions — which include tougher rules for NPLs — would lead to a stronger and healthier banking system which would inspire confidence and be able to operate effectively in a demanding European environment.
He said procedures to set up an asset management agency would start straight away. It will be managed by a specialised foreign company and should generate significant revenue, he added.
“As a result the state budget in the next few years will not only not be burdened but it will be boosted, making the management of the debt totally viable. This positive prospect is already reflected in the reaction of the foreign markets,” he said.
Georgiades said the legal framework would become “more effective and fairer” as strategic bad players will have less room to exploit the system. On the other hand, the extension of the Insolvency Framework and the Estia scheme that potentially may cover half of the non-performing loans guaranteed with a primary home offers adequate security,” he added.
Striking an upbeat note after dire warnings from Opposition parties of a heavy burden on the economy, Georgiades said that the government believed that yesterday’s decisions will lead to a faster handling of the problem of NPLs, will facilitate the proper operation of the banking system, allow high rates of growth to continue and lead to full restoration of investment confidence in our country.