Keravnos quits to take over troubled HB

DISY slams move as “unethical”

Finance Minister Makis Keravnos resigned his post Tuesday, ending several months of speculation that he would take the helm of the troubled Hellenic Bank.

President Tassos Papadopoulos accepted the resignation and appointed Communications and Works Minister Haris Thrassou as acting Finance Minister, fuelling rumours that a cabinet reshuffle is also imminent.

Keravnos accepted an offer to become the Chief Executive Director of the Hellenic Bank a day after the troubled bank announced disappointing first half results, due mainly to continuing problems with its loan portfolio in Greece that prompted Moody’s to downgrade the bank’s ratings.

The opposition Democratic Rally (DISY) slammed Keravnos for his hasty departure saying it was unethical to negotiate a job offer from a financial institution at the time that he served as Finance Minister.

Hellenic Bank saw its own Chief Executive, Constantinos Loizides, resign a few months earlier that left the bank headless with spiralling costs at a time when its peers, Bank of Cyprus and Laiki Bank, have reported a sharp increase in profits and resumed paying dividends.

Keravnos’ biggest achievement was the reduction of the public sector deficit to within European Union requirements.

Last week he submitted the 2006 state budget that sees a deficit of about CYP 630 mln that will go to the House of Representatives for debate and approval when parliament resumes on October 6.

The budget aims to curb the fiscal deficit at 3.7% of the Gross Domestic Product (GDP), while the deficit is expected to be further reduced to 1,7% of the if the measures provided by the government convergence plan are implemented.

The cost-cutting measures would allow Cyprus to meet its stated target of joining the euro zone in January 2008.

Cyprus has been tackling high deficits and debt figures for years and has to cut its budget deficit to below 3% to qualify for eurozone admission and show declines in public debt, hampered mainly by an uncontrollable public sector payroll.