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Hourican disappointed by shenanigans

John Hourican, the outgoing CEO of the Bank of Cyprus said he was disappointed by the ‘shenanigans’ of lawmakers that delayed and diluted laws aimed at helping banks collect on a huge number of non-performing loans.

John HouricanLAWMAKERS have let bailed-out Cyprus down at times, the outgoing chief executive of the country’s biggest bank said Wednesday, adding that “shenanigans” which delayed key laws aimed at helping banks collect on a huge number of bad loans have left him disappointed.

In a scathing critique of Cypriot legislators, Bank of Cyprus CEO John Patrick Hourican said it’s been “embarrassing” for him to explain abroad actions that had delayed and diluted a key foreclosure law that was passed last year.

He said in an interview with The Associated Press that the law is neither strong enough nor its implementation swift enough, hampering the bank’s ability to boost lending and getting the economy growing faster. Legislative gaps — like where auctions on foreclosed property will be held — remain a stumbling block.

The Bank of Cyprus was at the centre of a March 2013 multibillion euro rescue deal that forced a seizure of uninsured deposits in the country’s two largest lenders and shuttered the smaller bank.

Although Cyprus has earned plaudits for sticking to its rescue program’s terms, creditors point out that bad loans remain the country’s No. 1 priority. Around half of Bank of Cyprus’ 24 billion euros ($25.6 billion) worth of loans are sour, Hourican said.

Hourican said Cyprus was “poorly treated” by its European Union partners and called the deposit grab a “cardiac arrest” of such scope that confidence in the Cypriot banking system will take many years to fully restore.

Hourican, who took the job in October 2013 and helped put the deeply ailing bank on a firmer footing, conceded that lawmakers have done their bit to satisfy creditors’ demands. But “populist” rhetoric is prompting some borrowers to hold back from repaying what they owe on the impression they can get a “better deal.”

“The parliamentarians have decided heading into an election year that it’s good to raise populist measures and what they’re doing is driving up delinquencies and not helping us fix them,” Hourican said.

“I would like some maturity and responsibility taken in helping the country driving its legislative agenda, recognizing that depositors of this bank are the victims at this point in time, whether you like it or not.”

Cypriot President Nicos Anastasiades will plead with bank chiefs Thursday to tackle the bad loan issue more quickly.

“Now we can provide credit to the economy … but it will be turbo-charged by people meeting their obligations,” Hourican said.

© 2015 Associated Press

Readers' comments

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  • Nick says:

    I think that what is really upsetting the turkeys in parliament is not what Mr Hourican is saying, but where he is saying it: ABROAD.
    As a former neighbour used to say “They don’t like it up ’em.”

    (Editor’s comment: According to the Associated Press report the interview took place in Hourican’s office at the Bank of Cyprus HQ in Nicosia.)

  • Scruffy says:

    @Steve

    The Developers may not have the majority of NPLs but I would’nt mind betting that they are responsible for a vast number of NPLs that exist because they either failed to produce what they promised or after selling were found to have hidden mortgages. I know of at least half a dozen who walked away from their purchase as they were not prepared to pay for something that(at that time)would never be theirs.

    My own developer was owing the bank over €2,000,000 which had not been serviced since 2004. I bought in 2007 and he had taken out a new mortgage just before I bought.

    As for those who ticked all the boxes, I spoke to a local Cypriot who earned less than €2000 a month but was able to borrow €500,000. He has since lost his job and has not paid a payment for almost 4yrs. What checks had been done with him?

    So yes, it is “fashionable” to blame the banks simply because the dug their own hole and had no care who else would fall into it with them.

    They are simply crooks and deserve no sympathy.

    As pointed out by Nigel, Iceland saw them for the criminals they are and the bankers in Cyprus should be keeping their mouths shut and be thankful that they escaped the same fate.

  • @All – It seems that John Hourican’s comments have upset parliament! The following from Stockwatch:

    Hourican’s statements unacceptable

    Parliament’s president Mr. Giannakis Omirou called the statements made yesterday by the bank of Cyprus CEO Mr. John Hourican regarding the legislative body, as unacceptable and offensive to the parliament.

    Mr. Hourican in an interview to Associated Press accused members of the parliament for populist rhetoric prompting some borrowers to hold back from repaying what they owe on the impression they can get a better deal.

    Michael Persianis, director of corporate affairs at bank of Cyprus stated this morning at state radio that the Irish banker “does not take back what he has said”.

    According to Mr. Omirou it is provocative when the manager of a credit institution verbally attacks the parliament and supports that its members are at fault for allegedly delaying in exercising their duties.

    He pointed out that the parliament is an independent body, elected by the people, with its responsibilities stemming from the Constitution and it is not subject to control or guardianship neither of Mr. Hourican nor any other physical or legal person.

    The president of the parliament rejected Mr. Hourican’s statements, confirming that “the parliament will continue to study the government’s bills and proposals within a reasonable time as it is obliged to do, without blackmailing timetables and without advises from wherever those come from”.

  • Janice says:

    Steve – I think you miss the point, yes I also met affordability criteria based on the initial artificially low stated repayments – which were 0 for 2 years, then interest for 3 years. However, the repayments in euro terms escalated by 200% and were made worst with the additional margins being increased from 2% to 4.5%. As this bank policy applied all over, then property prices – whilst initially inflated – plunged by 60-70%, so now I cant sell to pay the capital off. Apply that bank policy to any individual or any business in any country, and you will have high NPLs. I could lose everything, and this scenario has been painfully dragging on since 2009. Hourican may be ‘disappointed’, but I am losing the will to live! Where is the justice? There are 1000s similarly feeling likewise.

  • Janice says:

    Completely agree ‘Tearing my Hair out’ – Bankers, especially some at RBS, were heavily fined in the UK and US – yet others in Cyprus have seemingly escaped any proper sanctions or punishment. It is hard to comprehend how no individuals at BoC / Laiki or indeed the banks themselves, have not been fined nor sanctioned or locked up for all their malpractice, and misery inflicted upon others, but instead are handed out huge sums of tax payers money. We now lead devastated lives, in a constant state of stress, and not knowing if we will lose everything we have ever worked for – almost as if we are criminals, and now on death row. Hourican has no idea of the realities affecting individuals – and yet he wants to pile on more pressure. I wish I could wipe that smug smile off his face!

    (Editor’s comment: Iceland recently sentenced 26 bankers to a combined 74 years in prison (we drove past the prison where they’ll be doing time when we visited Iceland in August.)

    The majority of those banged up have been sentenced to 2 – 5 years in jail.)

  • Steve says:

    It’s very fashionable in Cyprus to blame the banks, but it’s not as simple as it looks. There are many borrowers who fulfilled all the requirements and ticked all the right boxes to receive a loan or mortgage, who have paid back nothing. Some of them were developers or building contractors but not the majority. They do this because in their estimation the “better deal” referred to by John Hourican is that their loans will be WRITTEN OFF. The actions of the politicians are just encouraging these people. So far, none of them have suffered, rather money to prop up the banks has been taken instead from depositors and the depositors have not received a cent of the haircut back.

    Maybe some of those who are so ready to criticise the banks can suggest how banks can weed out those non-payers who have all the right answers and pass all the tests on suitability for a loan. All I can come up with is a lie-detector test and the question “Are you planning to default on the loan you are applying for?”

  • Tearing my hair out says:

    And I am “disappointed” that the bank he was at before garnered a £390m fine for fiddling LIBOR. As of August 2015 – one only person (out of the many banks involved in that scam) was convicted (a UBS trader).

    The hypocrisy and self-righteousness of these bankers beggars belief. In the period of the early 1990’s to 2008 they performed the largest commercial footprint land grab in history – using the most questionable & irresponsible practices. It led to global disaster – but instead of being arrested and charged (as any other class of criminal would be) – their institutions have all received paltry fines (against profits made) and their management allowed to pretty much carry on.

    To claim Cyprus has been “poorly treated” by it’s E.U partners. Holy cow! Has he ever talked to a single non-Cypriot property purchaser from the E.U about THEIR treatment buying property on the island from the confines of his ivory tower? The dismissiveness and arrogance of that remark is truly breath-taking.

    My only concern is those now intervening and regulating – are not fit for purpose as regulators as they seem to lack the necessary integrity, knowledge (and balls) to put the problems right. But, here is hoping (praying) for spade loads more sensible regulation applied going forwards and arbitration applied backwards to the ENTIRE banking sector. A new Glass-Stiegel act please – and the ‘performance’ bonuses of bank management pay capped and their CEO’s muzzled and kept on very short leash. Oh – and some lawyers we can trust would be nice too..

  • embapaphos says:

    shame ‘they’ didn’t keep hold of him at bocy

  • Peter Davis says:

    Just why should a Government get involved in the banking issue of bad debts and bad debt write-offs?

    Surely that is for the manager of the bank to sort out, if not just what is their job?

    In any other country bad debts are recovered from the customer and if that fails from the guarantor or the indemnity provider. If that fails they are sold to outsourcing companies who are ruthless and cut-throat in their collection techniques.

    Next we will hear that our Government is getting involved in shop opening hours or what goods a shop can sell? No, I joke that is too far fetched even for Cyprus.

    (Editor’s comment: The government is involved in shop opening hours. Try getting your hair cut on a Thursday!)

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