By next Thursday, the Parliament will have to vote on the memorandum bills related to Cooperation, mainly due to the timetables of the member states that must ratify them before the next Eurogroup, as explained the Minister of Finance Haris Georgiadis before the Finance Committee. Parliament. The Minister stated that these bills implement the decisions that support the Co-operation, both in terms of the recapitalization that will be done with state support, but also the changes in relation to the structure, operation and supervision of the Co-operation.
Noting that PIMCO's calculations for the 1,5 billion euros needed by the Co-operation, took into account the existing structure of the Co-operation and not the changes that will ensure a better operation at all levels, Mr. Georgiadis said that such a thing It also answers the question of whether the 1,5 billion euros are sufficient and whether additional funds will be needed. He also said that the Government would like the changes to address and correct the existing problems and not to undo the role of Cooperation.
The Committee examined the law proposing the creation of a Management Unit for the Government's participation in the ownership structure of Cooperative Credit Institutions.
The Minister stated that the main goal of the Unit is to safeguard the interests of the state, through a close, continuous and professional monitoring of the operation of the Cooperative without interfering in the normal banking operation, but aims to represent the state as a shareholder with what implies, something that did not happen in the case of Laiki. He explained that it will be a small flexible group, in which executives of YPOIK, the wider public service, the CBC can be seconded, who will have the sole responsibility of monitoring the Cooperation.
Individuals will also be suggested for staffing the Board of Cooperatives. He also explained that although the state will vote for the members of the Board, there should be supervision, since the role of a similar unit is completely different from the role of the Board and the supervisory role of the CBC.
The President of the Cooperative Central Bank, George Joseph, wondered who would defend the interests of the Cooperative, if the law on restructuring provides that the Minister of Finance will appoint the majority of the Board of Directors of the Cooperative Central Bank and will have oversight.
The Ministry of Finance stated that through the appointment of members of the Board of Directors of the Cooperative Central Bank, the state with very good meritocratic choices will ensure its interests.
He added that based on the provisions of the law that will be recapitalized, these individuals should be approved by the Finance Committee, after being judged and evaluated by the CBC, like all board members.
He added that there are various stages that maximize the control of the staff of the Board in the best possible way. He also said that the 99% shareholder has the right to leave a position on the Board that will not pay it, however, it is not the intention of the Government to leave this huge investment to a Board that will not have a decisive role in its selection. . Explaining other bills, the Finance Director at the Ministry of Finance, Andreas Trokkos, stated that the purpose of the bills related to the Co-operation is to transfer the supervisory responsibilities to the CBC and to introduce the necessary regulations to enable the recapitalization of the Co-operative sector. In the Central Bank Law, the term bank in a Licensed Credit Institution is changed and an article is added to connect the Cooperative Credit Institutions with the CBC.
The corporate governance of the approved SPIs is also strengthened and the granting of loans to the independent members of the BoD is prohibited. It is also foreseen that the total value of all loans of the members of the Board of Directors may not exceed 10% of the own funds of the Credit Institution.
It is also proposed to increase the amount of the administrative fine imposed by the CBC, when there is a violation.
State participation rate Disputes and questions were raised during the discussion in the Commission regarding the 1,5 billion euros that the state will contribute to the recapitalization of the Co-operation, as for the state participation rate in the Co-operation set at 99%.
The Central Bank expressed the view that the Government should normally have 100% of the shares, since half of the contribution goes to cover negative reserves, however 99% was entered for the possibility of repurchasing the shares.
MPs and representatives of the Co-operation challenged PIMCO's estimates of around 1,5 billion euros for the Co-operation and argued that the needs are much smaller, while at the same time wondering what will happen in relation to state participation, if it turns out that the needs will be smaller.
It was also stated that the calculations were not made according to international accounting standards and the state relied only on PIMCO estimates. The General Manager of the Cooperative Central Bank, Erotokritos Chlorakiotis, wondered why the state did not take shares b 'with which it would not acquire ownership status and why it took shares a' with no possibility of recovery.
The Chairman of the Committee, Nikolas Papadopoulos, spoke about possible legal problems from the calculation of the share capital in two different ways in the case of cooperation and in the case of Laiki Bank. The Minister of Finance stated that the Government is not able or willing to comment on the work done by PIMCO, however it is the starting point.
He added that the state did not want and does not want this participation in the share capital of the Co-operation, but it is a forced participation with terms and conditions not set by the Government, but by the supervisory rules and conditions of the Central Bank and the European Commission.
He also said that under different conditions the recapitalization of Laiki took place then, and with different conditions it was done by the Bank of Cyprus or the cooperative. There is a different methodology, he said.
He added that the state may have preferred shares b 'with a guaranteed return, but had to take shares a' to ensure effective control.
Audit Office of Cooperative Institutions
The Commission also raised the issue of the viability of the Audit Office of Cooperative Institutions for which there is no provision to ensure its work.
The service and the trade unions were asked to transfer the employees to other services and to secure the staff.
The Transfer of Employees of the Service of Cooperative Companies to the Service in the CBC, provides for the maintenance of the existing payroll and employment conditions of the employees of the CBC.
Deposit protection
Mr. Trokkos explained that the goal through proposed variations is to make it possible to transfer the deposit funds of the Cooperatives under the responsibility of the management committee that also applies to commercial banks. The deposits of the provident funds, he said, are now covered for 100 thousand euros per beneficiary, for all the funds that are written under the company registrar.
Restructuring of financial institutions
With another bill, the Council of Ministers may change the terms governing the capital instruments upon a relevant proposal of the CBC. Also, in case state support is needed, the institution should primarily use the resources of shareholders, equity and securities.
Exceptions are also possible in specialized cases, when state aid is small in relation to the amount, total capital needs and in case financial stability is at stake.
There is also the possibility that when an organization shows a deficit, after receiving the opinion of the Supervisory Authority and the Minister, it can start raising its own funds, by changing the terms voluntarily.
There are also special arrangements for the purposes of recapitalizing the Cooperative Central Bank and the SPIs through the channeling of funds to the Cooperative Central Bank. The debate in the Finance Committee on other bills will continue tomorrow.
Source: FILELEFTHEROS