Cypriot Parliament approves state guarantees in co-op deal

The Cypriot Parliament has passed legislation aimed at providing state guarantees to Hellenic Bank in its acquisition of Cyprus Cooperative Bank’s healthy portfolio.

The bill, which was passed late on Sunday, removes obstacles for the government to offer a financial cushion to organizations on the basis of protecting public interest, essentially approving state protection for Hellenic Bank over absorbing potentially high-risk loans from CCB.

The ruling party DISY was joined by the opposition DIKO and EDEK in backing the bill which passed with 32 votes while 20 MPs voted against the government-sponsored legislation.

A number of other bills, including long-overdue foreclosure and bankruptcy laws, were also approved during the Sunday emergency session, while last-minute amendments offered by the opposition failed to garner adequate support.

The state’s attorney general had warned parliament earlier not to try and pass amendments at the last minute, citing lack of legal scrutiny.

Hellenic Bank is set to acquire a healthy portfolio in the Cyprus Cooperative Bank (CCB), an institution which is burdened with around 60 percent of non-performing loans (worth some 7 billion euros), with the commercial bank absorbing co-op banking operations and assets except bad loans and toxic assets.

But Hellenic demanded state guarantees for absorbing potentially high-risk loans in the co-op takeover.

DISY chairman Averof Neophytou had warned earlier that if MPs failed to pass legislation on state guarantees on Sunday, ahead of summer vacation, the Hellenic-CCB deal could be in jeopardy.

Centrist DIKO leader Nicholas Papadopoulos, whose party granted the necessary votes to the government bills, also stressed that votes were needed to avoid catastrophic consequences to the Cyprus economy.

The leftist opposition AKEL has accused the government of using manipulative politics leading up to the Hellenic-CCB deal, saying DISY and the government have placed special interests above the common good and public interest.

Source: ekathimerini.com