European supervisors had been very worried about the future of the Cyprus Co-operative Bank and were losing their patience. But the CCB management committee’s response was to send them threatening letters even just before the lender was forced to shut down.
In its recently-released report, the committee of inquiry specifically noted the threat to supervisory authorities contained in a letter dated 2/3/2018 by Nicholas Hatziyiannis, acting chairman of the management committee, according to which the bank reserved all legal rights in relation to the outcome of their on-the-spot audit.
This action reflects (on the basis of lenient criteria) lack of understanding of the situation in which the bank had been early in 2018, noted the report.
In addition, “it shows the management committee’s inability to comprehend, for over four years, the seriousness of the numerous and persistent warnings by the Supervisory Authorities as regards the strong weaknesses in corporate governance and management of NPLs in the CCB.”
As a matter of fact, when it was necessary for top ranking members of the CCB to take a stand on this issue before the supervisory group they had expressed no scruples at all, said the report.
And it added that “on 2/3/2018, a Joint Supervisory Team meeting was held with top executives of the CCB, during which the team informed of the preliminary results of the audit so as to pave the way for possible comments by the CCB representatives.”
But the CCB officials had no scruples at all as regards the crucial assumptions and findings, “managing to surprise even the head of the supervisory team.”
The committee of inquiry concluded that there was no answer to the question why the CCB representatives had been so passive. A possible explanation might be that the person in charge of NPLs had failed to even attend that meeting with the supervisory authorities.
“And this proves further the inadequacy of the CCB Administration but, above all, their failure to comprehend how critical the situation was.”