Finance Minister Harris Georgiades’ future remains in the balance despite parliament approving a legal framework to reduce the island’s debt mountain and push through state guarantees to enable Hellenic Bank to absorb the failed Co-op.
Georgiades said Monday he had tendered his resignation to President Nicos Anastasiades following criticism – by the Opposition – of a botched Co-op deal.
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He said he was ready to stay or step down, depending on the decision of the president and not what the Opposition thinks.
Later on Monday, Anastsiades issued a statement saying he had "full confidence" in his finance minister whom he credited with "brining the country back from the brink of bankruptcy".
Georgiades is not the only person to be in the firing line with politicians also calling on Central Bank governor Chrystalla Georghadji to also resign over the Co-op debacle.
Cypriot MPs approved a deal to save the banking system by tackling NPLs and rubber stamping the Hellenic-Co-op deal during an extraordinary session on Sunday.
Georgiades said the new legislation will help restore investor confidence in the economy which will now keep on the right track.
The bills were approved by a majority vote 32-20. The ruling Democratic Rally party (DISY) and the opposition Democratic Party (DIKO) gave their seal of approval to the bills.
Main opposition party left-wing AKEL party voted against all the bills.
The bills provide for faster procedures for the reduction of NPLs, while expanding the insolvency framework to protect vulnerable borrowers and their guarantors.
It should make it easier for banks to collect bad loans or go ahead with repossessions.
The EU had urged Cyprus to tighten legislation to reduce NPLs – 43% of the total loans — as they threaten to derail the economy and the banking system.
Effectively MPs were called on to pass crucial legislation to prevent Cyprus needing a second bailout in five years.
Financial Ombudsman Pavlos Ioannou said on Monday there was now a clear legal framework to manage mortgages arears and NPLs.
Amid the raft of bills MPs approved legislation that enables Hellenic to acquire the ‘good parts’ of the troubled Cooperative Bank.
The law allows EUR 2.6 bln in state guarantees to underpin the multibillion-euro takeover to limit possible losses to Hellenic.
Jittery depositors withdrew savings more than EUR 500 mln amid speculation about the Co-op's future.
Cooperative Bank is 77% state-owned and the top bank for domestic deposits in Cyprus.
But it's weighed down by bad loans (EUR 6.5 bln), which represent nearly 60% of the total loan book.
The alternative to passing the bank deal legislation would have been the winding down of the Co-op and probably the loss of billions in bank deposits.
The government said that the need for the recapitalization of the Co-op forced it to sell the bank.
It is estimated the Co-op deal has burdened each household by an extra EUR 15,364.
