It is a blessing that we have had the existing Governor of the Central Bank, prior to the global economic crisis, when he introduced, at the time he did, strict lending measures. We, as an Οffice, amongst the total economic community of Cyprus, had objected to his measures and we criticized him as such, be, it most mildly.

There was a period that the Governor was not very popular with the existing Government, but following the prevailing circumstances, the Government (we hope) has changed its mind.

Cyprus has one of the highest lending rates in Europe and the Government in order to keep the rates down (responding to the Banks’ argument that they did not have enough funds, hence they pay high deposit rates, which in turn increases the lending rates), injected into their accounts another €3 bil. of public funds, in order to increase their liquidity. One hoped that this large (by Cyprus standards) sum, would have helped reduce the lending rates. Alas, the situation has remained the same with no signs of an interest rate reduction. For this reason we have voiced our views in a previous article in the Greek press, that the fund of €3 bil., ought to have been managed by a Governmental institution, whose aim should have been the financing of deserving but socially needy people, including home buyers-foreign and locals. The Government has borrowed the €3 bil. at 3% and the Banks are charging 7% (+). So, here we are, helping the Banks on the one hand and they are making a “killing” on profits. This is so recorded in the Banks accounts, which show profits of several hundred millions per year, as opposed to other businesses, which are either in the red on showing heavily sliding profits. Our socialist/ communist (so called) President, stated repeatedly that it will not be a great loss if banks show reduced profits and the “Golden Boys” get a lesser bonus. Some of these Cypriot Golden Boys have returned their bonuses and this is to their credit and we add that this should be publicised (in hope that others will follow).

What we are afraid it will happen with Cypriot based banks which have branches abroad, is that they will use the hard “earned” €3 bil., to finance clients abroad from whom they can earn more than in Cyprus (see Greece as an example). This sort of situation reminds us of the U.K. situation, where most Banks are now Government controlled (being the major shareholder) but the “Golden Boys” still receive their bonuses of millions. The Government’s suggested that these funds of €3 bil., should be used for Cyprus local loans, alone, but, this was not confirmed by the Bank, other than a lip-service.

We do not want to be nationalistic about the whole situation, but is there a logic for our Government to borrow and deposit their “debt” with the private Banks, in order to help the local population, only to be met with unkept promises? Is it not about time that the Government takes a more firm stand on the matter and use the €3 bil., through, perhaps, the Government finance institutions, to help the small businesses and home buyers?

The problem with the Banks behaviour etc, is not restricted to Cyprus, but it is more an international one. It appears that Banks are holding at ransom the population and notwithstanding the measures taken by the Governments (see Greece taxing bonuses by 90% and U.K. by 50%), the situation, we are afraid, will not change. We believe in the capitalist system that we have, but, things are changing in a recession of an unpredictable magnitude. Regrettably the “money people” do not care about the prevailing situation, although we understand that bearing in mind the competition and their eagerness for profit, they want to show to their shareholders positive results. Are we then and as a projection, suggesting a form of a socialist/Marxist system? Not necessarily, but reading about the foreign buyers in Spain given “hot-soups” this is a factor for discussion. Dubcheck (ex prime minister of Czech-Slovakia) said that “We need a socialism with a human face”. Courageous words and his end regrettably was humiliation.

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