The central banker spoke in football terms yesterday in Parliament, blaming the banks for delays in opening accounts, due to lack of staff training. Konstantinos Herodotou, on the occasion of his speech yesterday at the parliamentary Finance Committee, where he analyzed the challenges faced by the banking sector in the context of the budget debate, answered a series of questions from MPs of all parties, including the time-consuming procedures in opening accounts.
"One of the myths I would like to dispel," the governor told lawmakers, "is the cheap excuse we all hear, that Central regulations are responsible for delays." In a strict tone, Mr. Herodotus noted that, as explained to all organized bodies, Cyprus as a member of the Eurozone implements European directives and there are no special regulations and directives from the Central Bank. Why, he wondered, does opening an account in Cyprus take up to six months, while in Germany it takes two to three weeks?
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Clarifying and citing football as an example, he noted that the Central Bank is like UEFA, participates in the issuance of regulations, issued by the European Banking Authority and the Single Supervisory Mechanism and we bring them to our country. If a team does not play well, said Mr. Herodotou, then it is the fault of the coach, who is the management and the Board of Directors of the bank, who must impose the training of the staff, having a great responsibility for the issue.
The central banker explained that banks must assess the customer's risk with due diligence in each case. In the event that the customer is known to the bank, he added, then the risk is reduced. He stressed the importance of professional bodies, such as law firms, with due diligence to proceed with the evaluation of the client and not to leave the ball to the banks. Regarding the controls carried out by the Central Bank, he stated that they are sampled and it is being examined whether the risk assessment was applied.
Further consolidation of banks is not ruled out
In his speech to the members of the Finance Committee, the Governor of the Central Bank noted that the low profitability of banks, due to the existing environment and competition from payment institutions, create the need to increase their efficiency, while the adjustment of their business model is necessary. "In this context, there is a need for investment in digitization, which costs in the short term, while the benefits are presented gradually, but essentially in the long run. "Based on the above challenges, we can not rule out a possible further consolidation of our banking sector," he said.
Central Governor: No to interest rate hikes
The governor of the Central Bank, answering questions from MPs about the increase in inflation, opposed the increase in interest rates, as the phenomenon, as he claimed, is temporary and therefore an increase in interest rates would further affect businesses and households. "Inflation is expected to continue its upward trend in 2022, due to the continuing upward impact of the aforementioned factors related to supply and demand conditions in the midst of the pandemic, as well as the projected continued recovery in domestic economic activity." noted in his speech.
Regarding the restructuring of loans, Mr. Herodotou stated that, as a result of the interventions of the Central Bank, there was a significant increase in the first half of 2021 compared to the corresponding half of 2020. Specifically, the loans that underwent restructuring in the first half, according to with Mr. Herodotus, at € 1,4 billion, compared to € 270 million during the corresponding period last year (increase over 400%).
Mr. Herodotou said that the MES index from 27,9% in December 2019 fell in June 2021 to 17,4%. He stressed that the pressure for further reduction continues from the Single Supervisory Mechanism, since the average of the index in the Eurozone has fallen around 2%. He noted that progress in reducing NPLs is not uniform, from all banks. "Mostly one bank managed to successfully reduce the NPLs, for the other banks we are urging them to reduce them," he said.
Responding to AKEL criticisms about the need for a mechanism for resolving disputes between borrowers and banks, he said that the CB ran the mechanism and consulted with the ECB, but then the law was amended, the Supreme Court was referred to, which approved the law, and we are useless.
philenews.com