As unpatriotic as it may sound, the Cypriot banks must decide very fast what they should do with their operations in Greece, where all three are exposed to the tune of 20 bln euros, most of which morphing now into non-performing loans.
Whatever the choice, the outcome must be clear – in order for Cypriot banks to survive, they must cut off their Greek divisions and refocus their efforts on Cyprus and Cyprus-based activities into Russia and the CIS.
Precious time was wasted last year until we got the finance minister and the central bank governor talking to each other. In the meantime, reckless bankers and major shareholders took advantage of the cost of Greek government bonds and hoped to make a quick buck in order to cover their huge losses. They knew it was a high-risk investment but never believed that things would turn south. How naïve bankers are sometimes.
Fortunately, the verbal diarrhea splashed around by some ignorant politicians has died down, now that the ruling party’s aim has been achieved – to get rid of the island’s centralbanker at any cost. No one has yet to come forward to suggest what we should do next, simply because they don’t know.
The outgoing governor of the central bank was right to say that his main failure was to convince the president of the vicious cycle the Cyprus economy was entering. His only mistake was that he should have shouted his argument as publicly as possible and disregard the banking confidentiality rules, simply because those who wanted to displace him had no respect for democratic principles and procedures, freedom of speech or any confidentiality rules of their own.
To their credit, the new governor, the low-key finance minister and the soft-spoken Laiki chairman are working on the sidelines to come up with a plan that will save the Popular Bank, prevent Cyprus from entering any mandatory stability fund and rescue the island’s reputation that has so badly been tarnished because of greedy politicians and their greedy banker friends.
Let’s give these three people a few more days to the June deadline to see if they can come up with a gullible rescue package that will also take into consideration the minority shareholders of the banks. After that, we will have ample time to investigate the responsibility of each party, be they within the central bank, the ministry of finance, parliament or the current administration.
Trouble is, appointing an independent inquiry might be disregarded by the highest of politicians, just as they did the Mari report.
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