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Scheme to alleviate bailout losses

Cyprus Finance Minister Harris Georgiades has announced the creation of a scheme to alleviate bailout losses, which amounted to €8 billion, incurred by depositors as a consequence of the bailout.

Scheme to alleviate Cyprus bailout losses of depositorsCYPRUS will set up a scheme aiming to alleviate the losses suffered by uninsured depositors (over €100,000) whose deposits have been converted to capital as part of the bailout of the banking sector during the 2013 financial meltdown, Minister of Finance Harris Georgiades announced on Thursday.

As part of the 2013 bailout financed by the EU and the IMF, Laiki Βank, the island’s second largest lender was liquefied, resulting in the loss of deposits over €100,000, while Bank of Cyprus, the island’s largest bank, was recapitalised with the bail-in tool, featuring the conversion of 47.5% of deposits over €100,000 to equity.

According to data by IMF and the Central Bank of Cyprus, a total of €8 billion was wiped out as part of the bailout agreed in March 2013.

“The government acknowledges that the bail-in measure brought an excessive financial burden to a portion of our citizens,” Georgiades said in statements to the press, adding the scheme will utilise the national solidarity fund, established in 2013.

He said the government will build up the fund’s reserves’ by depositing €25 million this year, with the second tranche to be deposited in the second half of 2018, while money will be deposited to the fund each year based on the fiscal performance.

“We believe that this is the only feasible prospect albeit it does not offer immediate remedy. This is an achievable proposal, compared with various unfeasible and inapplicable proposals that have been heard,” Georgiades added.

The Finance Minister noted that the government has decided to explore the possibility to grant the fund state land of significant value, which remains unexploited.

Replying to questions, Georgiades gave no further details as to who will be eligible to receive this compensation, noting that scheme’s details will be outlined in the scheme that will take into account a series of legal, financial and social parameters, while it will be constitutionally legitimate.

He noted that the scheme will be drafted as soon as the fund has adequate reserves.

“Instead of handing out promises, we begin placing money on the side, now that fiscal conditions allow it to gradually create a feasible prospect to partially alleviate the cost for a part of our fellow citizens,” he said.

– Cyprus News Agency

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  • aggis Demetriou says:

    Who ever is to blame Anastasiades shouldn’t had accepted the bail in, banks of Cyprus should had gone like Laiki

    You musnt forget BoC was taking over the world, they were buying village banks overseas for 400 million each, we had Potato pickers running banks,

    Will the bank ever refund their client for the miss selling of the “Swiss francs”

    Till my last breath I will never trust any bank on this Island.

  • Deanna says:

    Fund or no fund; there are a lot of people out there who will never again trust their savings to BoC.

  • Johnny Cyprus says:

    Costas -they should be able to since expats originally provided nearly all of the 22,000 Euros paid into the National Solidarity fund back in 2004. Fellow citizen, public and private employees declined to make any contribution from their “13th salary” back then or since.

    It looks like the finance minister is recycling old news; the NSF, launched by the government in 2003 in a futile attempt to recapitalise the defunct banks, was a complete flop. Of an initial target of 5 billion, only a few thousand pounds was ever reported as raised. This new “scheme” would seem to be a dependant of the vacuous original “fund”.

    If the 25 million ever finds it’s way into the fund, it will probably be gobbled up by administrative expenses.

    Neither expat nor Cypriot depositors who had their accounts plundered should expect any recompense.

  • Costas Apacket says:

    I wonder if all nationalities who lost money will be classed as ‘a part of our fellow citizens’?

  • embapaphos says:

    What is really really annoying is that whatever fund is setup it will ultimately be funded via the taxpayer, so taxpayer including those fleeced during the bail-in will have their money used to fund a pot of money to re-fund themselves! and generations to come will be paying.

    IF fresh new money is found (ie proceeds from the potential oil and gas finds) then the govt can get back on it’s high horse.

    Ed: I agree with your sentiments. The people who should be paying are the previous AKEL government who did absolutely nothing to prevent the collapse and then delayed, delayed and delayed seeking help. Catastofias eventually borrowed enough money from Russia to keep things going until the election leaving it to Anastasiades to clean up his mess. Had the AKEL government acted when it should have acted Cyprus would have avoided the bail-in.

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