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President, governor discussed banks

27/10/2015 10:10
The challenges which remain in the banking system were the subject of yesterday's meeting of President Nicos Anastasiades with the Governor of the Central Bank, Chrystalla Georghadji.

The meeting was also attended by Finance Minister Haris Georgiades and government spokesman Nikos Christodoulides.

According to leaks from the presidential palace, the meeting between the government and the governor did not address the presidency’s stated desire for her removal.

The presidency insists that the discussion was limited to issues related to the banking system and the economy, mainly the issue of NPLs, the quantitative easing program and its use by the CB, the country returning to the markets and the expected exit from the memorandum.

Extensive reference was also made to the period that will follow the expiry of the adjustment program, as banks will continue to have the great challenge of NPLs on their balance sheets.

The finance minister said the country will completely exit the memorandum in March 2016, regardless if the international creditors would like to continue monitoring for some more period the state of the economy.

The government plans not to use about a quarter of the money of the program, despite the very low cost of borrowing from the support mechanism.

Mrs. Georghadji reportedly raised the issue of loans in Swiss franc and expressed her concerns about the consequences that will arise if banks assume the exchange loss suffered by the affected borrowers.

The CB has estimated that the total loss for banks in the event of a legal regulation of mortgage loans will reach €250 mn.

The CB is also concerned about the legislative backlog in relation to the subject of the securitization and sale of loans, as well as gaps in the package of laws on insolvency which was passed by the parliament.

In the morning, the CB had announced that the meeting with the President was scheduled, in an attempt to stop speculation about an impending resignation of Mrs. Georghadji.

The governor is facing a process of a possible dismissal by the Supreme Court, since mid-March. The prosecution which had the responsibility to bring the case to the Supreme Court, however, has not proceeded so far.

The CB pushed the previous governor, Panicos Demetriades, to resign, threatening him with prosecution while he was given a € 300 thousand compensation, for an early termination of his five-year contract.

Mrs. Georghadji holds the top post in CB since April 2014.