Reading the signs after Co-op’s demise
Hellenic Bank CEO Ioannis Matsis declared this week that shareholders approving the necessary capital increase to fund the Co-operative’s good assets takeover was “a historic moment” for the island’s banking sector and the economy in general.
From Hellenic’s point of view, he was absolutely right. Back in June, the Financial Mirror reported that the Co-op takeover was a “good deal” for Hellenic.
This was based on the assessments of analysts and the clean slate Hellenic would inherit, as the Coop’s huge portfolio of non-performing loans would move to a new ‘bad bank’, created from the ashes of the Cyprus Cooperative Bank, including some 900 staff.
As a result of the takeover – to begin in the first week of September – Hellenic will become the island’s second-largest lender, halving its NPLs and effectively doubling its metrics, on the way to profitability.
Matsis added that apart from stability in the banking sector, with two major lenders remaining on the island and the others as ‘niche’ banks, it was a continuation of the mergers and acquisitions that is necessary for the entire economy to consolidate.
What seems to upset so many is the skewed way the deal was concocted, directed and sealed.
As with anybody else in their shoes, Hellenic and its shareholders jumped on the opportunity to more than double their business, when the near-bankrupt Co-op was offered on a silver platter.
When the Co-op was already on its deathbed, politicians were coerced to accept whatever deal was put forward, warning that if this was not done, the entire banking system, and by extension the economy, would collapse ( where have we heard that before).
Of course, everyone forgets that the Cypriot taxpayer dished out 1.67 bln euros to bail out the Coop, which continued to ooze losses, due to the rigidity that prevailed, internally and externally.
The Auditor General Odysseas Michaelides joined the bandwagon of critics, saying that he had salvoed warning shots a while back by raising doubts about the procedures for appointing management and board members at the Co-op.
He was also sidelined by the same politicians who are praising him today because at the time he had wanted to conduct the audit of the ‘ new’ Co-op, but the supervision conveniently moved to the Central Bank’s jurisdiction, and we know how that institution has fared in its regulatory role in recent years.
The deal-bashers have now found a fall-guy in the Finance Minister, who is gradually being pushed to the slaughter by his own ‘allies’ in the DISY party leadership who forget that Harris Georgiades achieved the unthinkable by reviving the economy in quick time.
Valid questions we should be probing further is how and why the co-op deal was done – then this might tell us who was actually running the bank on behalf of the taxpayer and why the minister is in the firing line.