Printer Friendly

Our View: Lax attitudes to NPLs will worsen as election nears.

JOHN Hourican, the CEO of the Bank of Cyprus, did not mince his words on Tuesday, when he addressed the bank's AGM and explained to shareholders the net loss of e1/4554m for the first six months of 2017, which was attributed to increased provisions.

A week earlier, the bank had announced a e1/4500m increase in provisions for loan impairments.

The speech highlighted Hourican's frustration with the "high level of loan default" and our society's general indifference to the problem which has prevented the effective reduction of NPLs. This dubious attitude allowed "those who have the means to settle exposures to continue to be in default of their obligations", he said.

"We would entreat Cyprus society to more universally regard as unacceptable the deliberate default on obligations to repay borrowings. We must return to a normal expectation that the obligation to repay our debts is a fundamental foundation on which a modern and progressive democracy is built," Hourican said. He also pointed out that "it is the depositors of the predecessor banks that are carrying the cost of this behaviour."

Although he referred to Cyprus society, Hourican, was talking primarily about our political parties, which has taken a populist approach to NPLs, showing complete disregard for contractual obligations and the law. They tried to block, or make ineffective, bills aimed at helping the banks deal with NPLs and presented people not repaying their loans as victims of the banks they wanted to protect. In this way, the parties encouraged people not to reach agreements with the banks. The slowness of the justice system has also helped strategic defaulters as cases take years to be heard.

The obvious fear of the Bank of Cyprus CEO, although he did not spell it out, is that things could get worse in the run-up to February's presidential elections, during which populism and pandering to voters will be at peak levels. In election conditions, it is highly unlikely politicians will take any notice of Hourican's warning that the support of the legal system, the legislature and society were essential for speeding up the reduction of NPLs.

This is of no concern to our populist politicians who do not see the link between a healthy banking sector and economic stability. Taking a stand against deliberate loan defaults that are preventing the recovery of the banking system might lose votes and this is the only thing they care about.

How ironic that a foreign bank executive seems to be more concerned about the country's best interests than our politicians.

The post Our View: Lax attitudes to NPLs will worsen as election nears appeared first on Cyprus Mail .

Copyright [c] Cyprus Mail 2017 Provided by SyndiGate Media Inc. ( ).

COPYRIGHT 2017 SyndiGate Media Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2017 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:Cyprus Mail (Cyprus)
Geographic Code:4EXCY
Date:Aug 31, 2017
Previous Article:US Open results.
Next Article:Putin's weird war gets ever riskier.

Terms of use | Privacy policy | Copyright © 2020 Farlex, Inc. | Feedback | For webmasters