A PROFESSIONAL services firm hired to investigate why the country’s two largest banks had to seek state support will also seek evidence of potential criminal offences, the Cyprus News Agency reported yesterday, citing Central Bank sources.
“If the firm, before it issues the final report, comes across some evidence, which signals civil or criminal liability” it will inform the Central Bank and give the information to the Attorney-general to examine the matter, CNA said, citing un-named sources inside the Central Bank.
The Central Bank said last week it had appointed Alvarez & Marsal to investigate what led the country’s two largest banks, Bank of Cyprus and Popular, to seek state support.
The probe was expected to “provide clarity and comprehension regarding the current financial stress” and guide remediation to strengthen the stability of the banking sector, the Central Bank said in a news release last Friday. Cypriot bank capital shortfalls from over exposure to Greek debt and then reliance on the government for aid forced Cyprus into seeking a financial bailout from its EU partners in June. A&M will investigate the conditions under which the bonds were acquired, the banks’ expansion abroad and the responsibility of the regulator.
The result of the investigation will help the Central Bank Governor make the necessary changes if it transpired that certain things must be put on a better basis, the source said.
Popular required state aid to fill a €1.8 billion shortfall in regulatory capital, and the Bank of Cyprus sought €500 million i.e. support when its own recapitalisation efforts fell through.
Both banks posted considerable losses on Greece’s debt restructure earlier this year, agreed by European Union leaders to make that country’s debt more sustainable.
How can there be any liability when no one is to blame for anything?
@Mike. You are absolutely right. It just ain’t possible for literally every citizen to be corrupt. But this is the problem that arises in any society when corruption is allowed to hold sway for so long and in so many ways – people end up feeling AS IF everyone is ‘at it’. When that feeling has taken hold, it’s too late. The damage to the nation’s reputation has been done and it will take heaven and earth to restore it.
On Aristo, your rhetorical Q is right. But was there not always a potential, if not actual, conflict of interest vis-a-vis his BOC role? An unkind person might infer that the banks’ role in the title deeds scandal, provision of developer mortgages on sold property, creative accounting on developer NPFs etc may have been influenced by major developers. Where was the corporate governance and probity that the BOC board should have been exercising over at least the past 8 years? Why was such an individual with such obvious interests as a developer allowed to continue on the BOC board at all while such a toxic brew of accusations of bank-developer collusion was bubbling away?
‘Possible criminal offences’…Nah, don’t believe that.
Presumably this has no connection with the Chairman of BOC / Aristo Developers resigning from the BOC board has it? I heard the relinquishing of the post was for medical / Health reasons.
Steve: ..” the whole island is corrupt.”.. A bit of a sweeping statement is it not. I am not corrupt, at least I believe I am not. Could you elucidate?
I would agree there are indications that would point to corruption in certain quarters of the establishment but the whole Island. My mother would be mortified to read that was how you felt, not to mention my Father turning in his grave at the thought.
Odds on that the investigation team gets knobbled and nobody is to blame. Failing that it will be the fault of a cleaner who pushed a button on a keyboard when she was cleaning the desk. No investigation team will come up with anything, the whole island is corrupt.