06/12/2012 08:59
Former Central Bank Governor, Athanasios Orphanides criticized strongly once again the President of the Republic, Demetris Christofias and Christodoulos Christodoulou that many of the problems in the banking sector emerged from the approval of the merger of Marfin with Laiki Bank.
He said he was the only one who urged Andreas Vgenopoulos to transfer its headquarters in Greece, but he did not do so.
In a written statement, Mr. Orphanides said that the President of the Republic Demetris Christofias stated on Tuesday, December 4, 2012, in his message to the Cypriot people, that the conversion of Marfin Egnatia from subsidiary in Greece to Cypriot bank cost Cyprus €4 billion and that the conversion was approved by him”.
“The President’s statement, intentionally or not - I am not in a position to know - is false both in relation to the approval of the merger and the financial impacts of the merger on the grounds that:
1. In 2010, the headquarters of the banking group was already in Cyprus. "The Central Bank of Cyprus (CBC) and I personally were not asked to approve the cross-border merger between Marfin Egnatia and Laiki Bank and hence the" conversion ", according to Mr. Christofias, of “Marfin Egnatia from a subsidiary in Greece to a Cypriot bank”. The merger whereby Laiki Bank absorbed Marfin Egnatia was approved by decision of the Nicosia District Court dated December 15, 2010”.
2. According to the European supervisory framework, as defined in the European Directive 2006/48 relating to the taking up and exercise of the activities of credit institutions and the legal framework ("Capital Requirements Directive"), as well as the supervisory guidelines of the European Banking Authority (EBA):
(a) The conversion of a subsidiary bank to branch does not change the obligations of the parent company of the banking group in terms of covering the capital needs. It is for this reason that the results of the stress tests, conducted by EBA in 2011, did not alter the obligations of the parent companies of the banking groups for possible problems of the subsidiaries or their branches and did not alter the obligations of the country of origin.
(b) The parent company of the Group is responsible for the coverage of any required capital, regardless of whether we are talking about a branch or subsidiary. The competent authority responsible for the supervision on a consolidated basis, that is, the supervisory authority of the country that the group has its headquarters in has the responsibility to meet the required capital, regardless of whether we are talking about a branch or subsidiary of a banking group.
(c) The governments of the euro area countries agreed that if any part of the group (either branch or subsidiary) has a problem, the government of the country where the group has its headquarters has the obligation to provide temporary recapitalization. This agreement among the European governments was reached at the EU Summit on October 26 and refers explicitly to that decision, which was published the next day.
The Summit of October 26 was attended by the Cyprus President, Demetris Christofias. At the same Summit, Greece demanded and succeeded in getting additional - to the already approved by lenders - capital to meet the new capital requirements generated on its banks as a result of the haircut on Greek bonds. "I'm not in a position to know if Cyprus demanded protection of the Cypriot banks before President Christofias agrees with this decision”.
3. The examples that demonstrate practically the implementation of the supervisory rules that make the group and the parent company liable for any capital needs either of branches or subsidiaries are known - maybe not all, but certainly to the state and the supervisory:
According to Mr. Orphanides, the whole problem with Marfin for Cyprus would not have emerged if from the start it was not given permission for the merger of Marfin with Laiki Bank. "The decision, right or wrong, which virtually brought Andreas Vgenopoulos to Cyprus, was taken in 2006 by the Central Bank Governor, Christodoulos Christodoulou. Mr. Christodoulou, as a supervisor at that time, could have set a condition that the headquarters of the group should be in Greece. This would effectively transfer responsibilities for the coverage of any capital needs to the Greek state and not to Cyprus”.
Mr. Orphanides said that "if Mr. Andreas Vgenopoulos did what he threatened that he would do in 2009, that is, to transfer the group's headquarters of Marfin Popular Bank from Cyprus to Greece, I would have approved his request. The result would be that the Greek state would have the responsibility for the group. But Andreas Vgenopoulos, unfortunately, did not make his "threat". Many then, including the government of Demetris Christofias, begged him to keep the headquarters in Cyprus. I believe I was the only one who really urged Andreas Vgenopoulos to transfer the headquarters to Greece”.
“As regards the statement of the President of the Republic to his message to the Cypriot people about my supposedly responsibility for the losses in connection with the Greek bonds, I just remind him that it’s not me but he himself who jointly decided the haircut of bonds and the consequent loss of more than 4 billion for local banks”.
"I was not the head of the state and I did not attend the summit which took this decision. I was a central banker and I disagreed with the haircut. I am not in the position to know what President Christofias said and demanded before the decision taken. I agree with Mr. Demetris Christofias that the Cypriot banks lost more than 4 billion as a result of the decision of the summit”, he concluded.
He said he was the only one who urged Andreas Vgenopoulos to transfer its headquarters in Greece, but he did not do so.
In a written statement, Mr. Orphanides said that the President of the Republic Demetris Christofias stated on Tuesday, December 4, 2012, in his message to the Cypriot people, that the conversion of Marfin Egnatia from subsidiary in Greece to Cypriot bank cost Cyprus €4 billion and that the conversion was approved by him”.
“The President’s statement, intentionally or not - I am not in a position to know - is false both in relation to the approval of the merger and the financial impacts of the merger on the grounds that:
1. In 2010, the headquarters of the banking group was already in Cyprus. "The Central Bank of Cyprus (CBC) and I personally were not asked to approve the cross-border merger between Marfin Egnatia and Laiki Bank and hence the" conversion ", according to Mr. Christofias, of “Marfin Egnatia from a subsidiary in Greece to a Cypriot bank”. The merger whereby Laiki Bank absorbed Marfin Egnatia was approved by decision of the Nicosia District Court dated December 15, 2010”.
2. According to the European supervisory framework, as defined in the European Directive 2006/48 relating to the taking up and exercise of the activities of credit institutions and the legal framework ("Capital Requirements Directive"), as well as the supervisory guidelines of the European Banking Authority (EBA):
(a) The conversion of a subsidiary bank to branch does not change the obligations of the parent company of the banking group in terms of covering the capital needs. It is for this reason that the results of the stress tests, conducted by EBA in 2011, did not alter the obligations of the parent companies of the banking groups for possible problems of the subsidiaries or their branches and did not alter the obligations of the country of origin.
(b) The parent company of the Group is responsible for the coverage of any required capital, regardless of whether we are talking about a branch or subsidiary. The competent authority responsible for the supervision on a consolidated basis, that is, the supervisory authority of the country that the group has its headquarters in has the responsibility to meet the required capital, regardless of whether we are talking about a branch or subsidiary of a banking group.
(c) The governments of the euro area countries agreed that if any part of the group (either branch or subsidiary) has a problem, the government of the country where the group has its headquarters has the obligation to provide temporary recapitalization. This agreement among the European governments was reached at the EU Summit on October 26 and refers explicitly to that decision, which was published the next day.
The Summit of October 26 was attended by the Cyprus President, Demetris Christofias. At the same Summit, Greece demanded and succeeded in getting additional - to the already approved by lenders - capital to meet the new capital requirements generated on its banks as a result of the haircut on Greek bonds. "I'm not in a position to know if Cyprus demanded protection of the Cypriot banks before President Christofias agrees with this decision”.
3. The examples that demonstrate practically the implementation of the supervisory rules that make the group and the parent company liable for any capital needs either of branches or subsidiaries are known - maybe not all, but certainly to the state and the supervisory:
According to Mr. Orphanides, the whole problem with Marfin for Cyprus would not have emerged if from the start it was not given permission for the merger of Marfin with Laiki Bank. "The decision, right or wrong, which virtually brought Andreas Vgenopoulos to Cyprus, was taken in 2006 by the Central Bank Governor, Christodoulos Christodoulou. Mr. Christodoulou, as a supervisor at that time, could have set a condition that the headquarters of the group should be in Greece. This would effectively transfer responsibilities for the coverage of any capital needs to the Greek state and not to Cyprus”.
Mr. Orphanides said that "if Mr. Andreas Vgenopoulos did what he threatened that he would do in 2009, that is, to transfer the group's headquarters of Marfin Popular Bank from Cyprus to Greece, I would have approved his request. The result would be that the Greek state would have the responsibility for the group. But Andreas Vgenopoulos, unfortunately, did not make his "threat". Many then, including the government of Demetris Christofias, begged him to keep the headquarters in Cyprus. I believe I was the only one who really urged Andreas Vgenopoulos to transfer the headquarters to Greece”.
“As regards the statement of the President of the Republic to his message to the Cypriot people about my supposedly responsibility for the losses in connection with the Greek bonds, I just remind him that it’s not me but he himself who jointly decided the haircut of bonds and the consequent loss of more than 4 billion for local banks”.
"I was not the head of the state and I did not attend the summit which took this decision. I was a central banker and I disagreed with the haircut. I am not in the position to know what President Christofias said and demanded before the decision taken. I agree with Mr. Demetris Christofias that the Cypriot banks lost more than 4 billion as a result of the decision of the summit”, he concluded.
Related Articles
LATEST NEWS
24/04