Tweet
Yes, they paid interest at about 3.5% higher than Libor, so it was very attractive, This was possible because they charged about 7% higher than Libor for mortgages and 8-10% higher on commercial loans and 12% higher on unauthorised overdrafts and overdue credit cards. Of course, these crippling rates did nothing to stimulate the local economy, but they helped the Russian one, as well as the banks themselves. In the end, after the losses engendered by the Greek haircut, the 2 major banks had become a kind of Ponzi scheme. The former governor of the Central Bank of Cyprus, tried on several occasions to warn the former President who refused to listen to him and engineered the non-renewal of his contract. The Pres also engineered his replacement by a communist academic with no experience in banking, who compounded the problems. There are rumours that the new Pres is trying to find ways of getting rid of him with 4 years to run on his contract.
Comment