Co-op was a dead man walk­ing

Financial Mirror (Cyprus) - - CYPRUS -

Fi­nance Min­is­ter Harris Ge­or­giades ex­pressed his as­ton­ish­ment that the Co-op Bank did not col­lapse ear­lier than it even­tu­ally did, slam­ming the bank’s man­age­ment prior to 2013.

Ge­or­giades tes­ti­fied be­fore a com­mit­tee prob­ing the events lead­ing to the demise of the Co-op Bank.

The Fi­nance Min­is­ter said “the real ques­tion is not why the Co-op col­lapsed, but how did it sur­vive for so long with­out hav­ing any­thing. Zero cap­i­tal, zero cor­po­rate gov­er­nance and struc­ture. It had no pro­ce­dures, while the mis­man­age­ment of pre­vi­ous years was such that it pushed the or­gan­i­sa­tion off the cliff”. In his nine-hour tes­ti­mony to the com­mit­tee, Ge­or­giades painted a grim pic­ture of the way the Co-op was run up to 2013 fi­nan­cial cri­sis, while prais­ing the last board of the bank say­ing it was given “an am­a­teur team and asked to lead it to the Cham­pi­ons League”.

Re­spond­ing to a ques­tion posed by the chair of the en­quiry, Ge­orge Aresti, the Fi­nance Min­is­ter said that “from 2013, it was clear to me and to the gov­ern­ment that pri­vati­sa­tion was in­evitable. The state had to leave, but no one could then pre­dict how it will be done.”

Re­gard­ing the re­cap­i­tal­i­sa­tion of the na­tion­alised Co-op with an ini­tial EUR 1.5 bln, fol­lowed by an­other of EUR 3.5 bln, Ge­or­giades said that nei­ther the gov­ern­ment nor the in­sti­tu­tional lenders be­lieved that this money would ever be re­cov­ered.

“We did not have such an il­lu­sion, that we would re­cover our money or that we would have gains from the prof­its made by the Co­op­er­atists,” said Ge­or­giades.

He also de­fended the de­ci­sion to grant 25% shares free of charge to the share­hold­ers of the Co-op, say­ing it was a cabi­net de­ci­sion, and did not cause any de­lay in the pri­vati­sa­tion process of the Co-op.

Crit­i­cis­ing the Min­is­ter on his com­ments re­gard­ing the Co-op’s down­fall, Green MP Ge­orge Perdikis said that the Min­is­ter at­tempted to put the blame on oth­ers and wash his and the gov­ern­ments hands of their own re­spon­si­bil­i­ties.

He said that the Min­is­ter has in fact high­lighted that he him­self was the real man­ager of is­sues re­gard­ing the Co-op for the past five years and there­fore must also take re­spon­si­bil­ity for its fail­ure over those five years.”

Com­ment­ing on Ge­or­giades ref­er­ence of tak­ing on an “am­a­teur team to play in the Cham­pi­ons League”, Perdikis said: “We never asked him to take the team to the Cham­pi­ons League.

“We asked to play in the am­a­teur league but be the cham­pion of that league. We asked for the bank to be sus­tain­able, to re­main, to a great ex­tent, a pub­lic or­gan­i­sa­tion and to in­volve so­ci­ety in the ad­min­is­tra­tion of the wealth it has cre­ated,” said Perdikis.

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