NICOSIA – Thirteen of 56 Cyprus’ Members of Parliament owe 35.3 million euros in bad loans to the Bank of Cyprus at the same time the body has blocked legislation to allow home foreclosures.
They blame Central Bank Governor Chrystalla Georghadji with leaking a list of the names to embarrass them and as an attempt by her to save her job.
President Nicos Anastasiades, who appointed her, is trying to have her removed because of what he said was a conflict of interest and her failure to reveal an association her husband’s law firm had with a bank that was closed as part of a deal with international lenders two years ago to get a 10-billion euro bailout.
The Parliament hasn’t passed the foreclosure law as demanded by the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) and revelation of the bad loans owed by the politicians has provoked renewed anger over austerity measures imposed on the populace.
It wasn’t explained how lawmakers drawing big salaries aren’t paying loans at the same time banks are chasing others to pay theirs.
The disclosure comes as the IMF is withholding its share of a pending loan because Parliament has refused to pass a law allowing banks to come after bad debtors.
“Without the legislation in place we feel like we’re wielding a marshmallow hammer when we deal with debtors,” John Hourican, Chief Executive of Bank of Cyprus, told The Financial Times.
The lender has 500 staff working in its restructuring and recoveries division to deal with stressed or delinquent loans worth €11.5 billion, about two-thirds of the island’s Gross Domestic Product.
Banks being lenient on politicians isn’t confined to Cyprus. In Greece, the banks aren’t pursuing the New Democracy Conservatives nor the PASOK Socialists, who shared a coalition government before losing in January, although they owe more than 250 million euros in bad loans.
On Cyprus, supporters of the foreclosure law said it’s necessary to help the island’s economy recover although critics said it will be used to further punish people suffering from austerity who can’t pay, while exempting others.
More than half of loans to businesses and households on the island are non-performing. The same figure for Greece was at 34 per cent in September 2014, substantially lower despite higher unemployment and a more drastic economic contraction.
Hourican denied a charge that banks would use the legislation to chase vulnerable Cypriots out of their homes.
“It is absolutely not our intention to undertake mass foreclosures on normal people’s homes,” he said. “This would not be in the bank’s or society’s interests.” But he didn’t say it wouldn’t happen.