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Banking system comes under scrutiny

THE functioning of the institutions in the banking system is under the microscope of the House Institutions Committee.

The members of the Committee will discuss the promotion of loans in foreign currency without informing borrowers on the currency risks and the loans granted to senior executives of banks with bonus rates, according to allegations.

They will also discuss the extension of the branch network of banks in Greece, the high salaries and bonuses of senior bank executives during 2007 – 2012 and the privileged deletion of loan from financial institutions to organizations and companies connected with party and political persons and senior government officials.

The capital securities were discussed for a few minutes, after the letter sent by the Central Bank of Cyprus to the Parliament.

Given that the investigation is in progress, according to the letter, it would not be appropriate to reveal the positions of Cyprus Popular Bank and Bank of Cyprus on the issue.

Chairman of the Committee and EVROKO, Demetris Syllouris expressed the hope that the delay will not act as camouflage.

Chairman of the Capital Securities Association, Phoebus Mavrovouniotis said that they expected that the initial findings of the Central Bank would be a tool to convince the Troika that capital security holders were misled.

The legal adviser of the Association noted that the initial findings of the Central Bank ensure that there were irregularities, but we will expect the final outcome.

With regard to the general issue of the banks, the Chairman of the Commission, citing a letter from the Privacy Commissioner, noted that the disclosure of personal data in the parliament, ie disclosure of names, is permitted.

SEC Chairwoman, Demetra Kalogirou said that SEC’s report on Bank of Cyprus will be ready at the end of the year.

Specifically, it is investigated whether there were misleading statements to the public and misleading information was given to invest in securities.

For Cyprus Popular Bank, the investigation will begin in 2013.

Representative of the Central Bank noted that Pimco report also covering sponsorships with associated persons with the banks will be ready in mid-January.

He also stressed that the due diligence by Alvarez & Marsal will demonstrate how banks were led to the current state, while part of it will cover the extension of branches in Greece.

“As for the loans in foreign currencies, the Central Bank sent a circular in 2006 on the risks”, the representative said.

The MPs raised a number of questions, asking for the submission of data and the publication of names.