* First “luxury retirement resort” in Ayia Napa; Church lost €9.5 mln from investments, blames Christofias for haircut and banking crisis *
The outspoken head of the Church of Cyprus, often described as a shrewd administrator with good business sense, believes that the only way out of the current economic crisis is through growth, and this will only come out of back-to-basics investments, such as in quality tourism and energy.
Archbishop Chrysostomos II gave an exclusive interview to the Financial Mirror with the discussion swerving from the economy to politics, banking to growth, poverty to education, before ending up with the economy again.
On every topic, the primate of the island’s Greek Orthodox Church has a learned opinion and is not afraid to speak his mind, as was the case of his latest comments in favour of privatisation of state-owned services.
However, the Archbishop is a firm believer in developing the attributes of the hard-working and entrepreneurial Cypriots, saying that new projects will help revive employment, investing millions in the local economy and putting the island on the international map, once again.
One of his ambitious projects is to develop “luxury retirement resorts” that will operate throughout the year, attracting mainly higher-income northern Europeans.
The Archbishop has already assigned some of his closest associates to start work immediately, with the first resort expected to be built near the popular holiday town of Ayia Napa. Financing will probably come from overseas investors.
“All we want is a faster and simpler conclusion of procedures. No special treatment for us, just for things to move faster,” he said, adding that very often unnecessary red tape is a hindrance that slows down development and growth.
Archbishop Chrysostomos believes that with the highly qualified doctors and nursing profession on the island, Cyprus can very soon become a world leader in medical tourism, a global market estimated to be worth $40-60 bln, by attracting long-stay visitors who will enjoy high quality facilities, such as healing spas. The success of the first resort will pave the way for more such projects around the island, for which the Church of Cyprus has set aside some of its prime real estate.
“Of course, the market is open to everyone and I hope this will be the beginning for a major turnaround in our tourist industry. Our climate is only good for such developments, and we should focus on the services sector.”
There will also be a trickle-down effect with tangible benefits in the wider tourist industry, religious tourism, as well as the hospitality sector of food and leisure.
ENERGY AND PV PARKS
Energy is another sector that the Archbishop is interested in, saying that there are investment opportunities in photovoltaic parks and that potential partners from Russia, France and Israel have already been lined up. Already, some 100 donums of land have been earmarked for the project.
The Church had in the past considered participating as a minority shareholder in one of the bidding ventures for oil and gas exploration, an investment it has not given up on altogether.
BANKING WILL RECOVER
As regards the banking sector, the Archbishop is reserved, but sees some glimmer of hope, “if only the Troika [of international lenders] lets us to keep a sustainable capital adequacy level of closer to 8%, compared to 9-10%, and allows the banks about 4-5 years to recover.”
“The banks need time and the Church will stand in the way of anything that we disagree with.”
The banks are not blameless in their unwise investment choices, he said, adding that the Church lost some 9.5 mln euros in investments it had from its holdings of bank stocks and dividends. The biggest problem was probably the exposure to the property market which was over inflated.
The Hellenic Bank, in which the Church controls a direct and indirect stake of about 25%, is the better of the island’s three largest banks.
“I am not just satisfied, I am enthusiastic,” with their performance, despite a low-risk conservative approach to investments. The bank announced lower-than-expected losses of 23.4 mln euros for 2012, down from the 100.7 mln losses reported in 2011, most of which was attributed to the writedown of Greek sovereign debt.
“It was wrong that [the previous Christofias administration] blamed everything on the banks. Mistakes were made, but the haircut of about 4.5 bln euros was the result of the wrong decision taken by former President Christofias and his lack of communication with the former Central Bank Governor Athanassios Orphanides.”
Is it, then, the right time to talk about the merger of the two biggest banks – Bank of Cyprus and Laiki Popular?
“Maintaining the banks separate will also contribute to a healthier and competitive banking sector. If Bank of Cyprus is supported, it will be able to recover. The situation is worse in the case of Laiki, that will be difficult to sustain in its present form. I’m sure that investors will be found,” the Archbishop said, adding that the latter’s downfall started after Andreas Vgenopoulos took charge of the bank and concluded a three-way merger with Marfin and Egnatia.
RETURN OF THE POUND?
In comments he made later, Archbishop Chrysostomos suggested that if the Troika (European Union, European Central Bank and IMF) impose harsh conditions for the 17.5 bln euro bailout, “then maybe we should threaten them with exiting the eurozone and bringing back the Cyprus pound.”
However, he had harsher words for former President Christofias, Central Bank Governor Paniccos Demetriades and former Finance Minister Vassos Shiarly, saying they were to blame for agreeing to the terms of reference for the PIMCO due diligence of the Cyprus banking system.
“I told the board members and the management of the Hellenic Bank that if the central bank Governor or the former Finance Minister or the previous government are to blame, then the banks should consider taking legal action, because the guidelines given to PIMCO were wrong and aimed at showing unrealistic data, basically to cover the shortfalls of the government.”
As regards the new administration of Nicos Anastassiades whom he endorsed during the election campaign, the Archbishop said that the new president “will surprise us all.”
He added that although the Christofias administration did not have that many faults, “you cannot flaunt your communist culture all over the place. The previous government’s theory to take from the rich, simply made the rich poor, and the poor poorer.”
