The changes made by parliament on the law of foreclosures and the insolvency framework inflicted additional cost to the Cooperatives, the general manager of the finance minister Christos Patsalides stated today.
Speaking at the parliament's finance committee during the examination of the five bills regarding the Coop, Mr. Patsalides pointed out that with the changes made to these laws it was known that additional costs would be inflicted on the Coop.
He noted that troika estimates that due to the changes made, foreclosures will be delayed.
With the five bills that it prepared, the government is seeking to turn into law the recapitalization process of the Central Cooperative Bank (and of banks) and define the method of financing it through the fund's proceeds from the deposit tax imposed on banks.
The Coop must be recapitalised with additional funds of €200 mn which will be injected by the state.
Responding to MPs' questions what will happen in case the Coop is in need of fresh capital by next year, the finance ministry's general manager said that other options will be examined beyond state aid, from private sources.
Speaking about the capital needs of the three systemic banks Mr. Patsalides said that all of them successfully passed the stress tests of November 2014.
During the evaluation process of the three systemic banks by the SSM, he said, assumptions of an adverse scenario were used as property values were reduced by 30% resulting in additional needed provisions of €471 mn for the Coop.
As he said the capital adequacy of the Coop should be 12,25% but it is 12%.
A central bank representative said that the assumptions used for evaluating the Coop's capital needs were strict resulting in a deficit of €471 mn.
The president of the CCB Nikolas Chadjigiannis stressed that the Coop fully disagrees with the used assumptions which as he said are different than those used in the stress tests.
As he said the time frame for foreclosures increased from 4,5 to 7 years resulting in €120 mn extra annual cost.
He added that there was an effort for changing the assumptions pointing out that the value of collateral was not taken into consideration.
According to Mr. Chadjigiannis the assumptions used are the same for the whole Europe without allowing any changes for Cyprus.
Speaking at the parliament's finance committee during the examination of the five bills regarding the Coop, Mr. Patsalides pointed out that with the changes made to these laws it was known that additional costs would be inflicted on the Coop.
He noted that troika estimates that due to the changes made, foreclosures will be delayed.
With the five bills that it prepared, the government is seeking to turn into law the recapitalization process of the Central Cooperative Bank (and of banks) and define the method of financing it through the fund's proceeds from the deposit tax imposed on banks.
The Coop must be recapitalised with additional funds of €200 mn which will be injected by the state.
Responding to MPs' questions what will happen in case the Coop is in need of fresh capital by next year, the finance ministry's general manager said that other options will be examined beyond state aid, from private sources.
Speaking about the capital needs of the three systemic banks Mr. Patsalides said that all of them successfully passed the stress tests of November 2014.
During the evaluation process of the three systemic banks by the SSM, he said, assumptions of an adverse scenario were used as property values were reduced by 30% resulting in additional needed provisions of €471 mn for the Coop.
As he said the capital adequacy of the Coop should be 12,25% but it is 12%.
A central bank representative said that the assumptions used for evaluating the Coop's capital needs were strict resulting in a deficit of €471 mn.
The president of the CCB Nikolas Chadjigiannis stressed that the Coop fully disagrees with the used assumptions which as he said are different than those used in the stress tests.
As he said the time frame for foreclosures increased from 4,5 to 7 years resulting in €120 mn extra annual cost.
He added that there was an effort for changing the assumptions pointing out that the value of collateral was not taken into consideration.
According to Mr. Chadjigiannis the assumptions used are the same for the whole Europe without allowing any changes for Cyprus.
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