Local
articles | 13 September 2013

Cyprus prepared to compensate bailed-in depositors

A special fund is to be set up in a bid to compensate bank depositors who lost cash as part of the terms of the Cyprus bailout says President Nicos Anastasiades.

Cyprus will try to compensate Russian bank depositors who lost cash as part of the terms of the island’s €10 billion bailout, President Nicos Anastasiades has said. In an interview with Russian news outlet Itar-Tass, Anastasiades said a special fund will be set up, when the economy improved, to collect the cash that will also include revenues from future sale of natural gas.

Cyprus teetered on the brink of financial meltdown in March as it debated onerous terms of a €10 billion bailout, which included closing down its second biggest bank and seizing uninsured deposits to recapitalise the largest lender, Bank of Cyprus (BoC). Russian depositors lost millions in the process, which had been preceded by a campaign claiming that Cyprus was being used for money laundering.

One of the main criticisms from European paymaster Germany at the time was that the island could be a conduit for money laundering from Russia because of close business ties. Despite this, Russians have not betrayed Cyprus, Anastasiades told Itar-Tass. “Our friends have remained our friends,” he said.

It is very important since it encourages and gives Cyprus more confidence that it would be possible to restore the country’s economy, the president said. It has also become one of the elements to continue developing ties with Russia, he noted. Russians have lost part of their deposits and Cyprus will do everything possible to overcome the negative effects of the March decision, he said.

Depositors who lost money in the cash-grab were given BoC equity in return. The bank’s board of 16 individuals now includes six non-Cypriots, mostly Russians, representing individuals who lost considerable amounts of money in the forced conversion to equity of 47.5% of deposits exceeding €100,000.

Source: Cyprus Mail

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