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Friday, April 5, 2013
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Draghi: Cyprus to blame for turmoil ECB boss says proposal to hit small savers was not very ‘smart’
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HE EUROPEAN Central Bank yesterday put the blame for initial market turmoil over Cyprus’ bailout squarely on the government, and pledged that taxing depositors would not become normal procedure. ECB President Mario Draghi said Cyprus’ bailout was “no template”, a statement designed to ease market fears that bank deposits would in future be fair game for international lenders seeking to help struggling eurozone countries. But he was also scathing about the island’s initial plan to impose a levy on insured as well as uninsured bank depositors, even though the move was rubberstamped by the EU in the early hours of March 16. Draghi said the finance ministers and the International Monetary Fund had wanted Cyprus to help pay for its €10 billion with a levy on wealthy depositors only. Cyprus, however, had initially also sought to charge those with €100,000 or less even though they had a bank deposit guarantee. “That was not smart, to say the least, and was quickly corrected (by eurozone finance ministers),” Draghi said. The move was not reversed by eurozone minsters however, it was rejected by the Cyprus parliament. Draghi said depositors with guarantees should be sacrosanct, but that it was best not to touch any depositors if possible. “You have a pecking order, ideally insured depositors should be the very last cat-
egory to be touched. The (European) Commission draft directive (on banking) foresees exactly this. “There isn’t actually a specific distinction between categories of bondholders and uninsured depositors in the draft directive. But basically the point is that you, if you can, don’t touch uninsured depositors,” Draghi said. He also said it would be of no help to Cyprus if it left the eurozone, as some have floated. “What was wrong with Cyprus’s economy doesn’t stop being wrong if they are outside the euro,” he said. Draghi also sought to soothe concerns that charging depositors - called a “bail in” - would now be imposed on other troubled countries. Dutch Finance Minister Jeroen Dijsselbloem, who heads the Eurogroup of eurozone finance ministers, caused a stir in March when he told Reuters that the Cyprus bailout, including depositor levies, could be replicated in future. Draghi insisted this was not the case. “Cyprus is no template,” he said. “I am absolutely sure that the chairman of the Eurogroup has been misunderstood.” Dijsselbloem however clearly states that Cyprus would be used as a template but later backtracked when markets became spooked. Draghi also rejected yesterday the notion that the ECB bankers wield inordinate power over elected officials, as for example in the
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BANK EMPLOYEES ‘FEAR FOR THE FUTURE’
Bank staff staged a demonstration in Nicosia yesterday following a two-hour strike earlier in the day to demand protection of their provident funds and jobs (Christos Theodorides) SEE STORY PAGE 5
‘Mass deletion of data’ on former BoC execs’ computers By George Psyllides DELETION of data allegedly took place on computers belonging to senior Bank of Cyprus (BoC) executives, according to the leaked findings of a probe into the circumstances that forced the island’s biggest lenders to seek state assistance. Alvarez and Marsal, the firm tasked with investigating why Bank of Cyprus and Laiki sought state assistance, said the information provided by BoC was incomplete and data deleting software were found on the computers of two senior executives. “Our computer forensic technologists have found that the computers of two
employees, (former CEO) Mr. (Andreas) Eliades and (senior manager group treasury and private banking) Christakis Patsalides, have had wiping software loaded, which is not part of the standard software installations at the BoC,” A&M said. “Mass deletion of data appears to have been undertaken on the Patsalides computer on October 18, 2012.” A&M’s findings were handed over to parliament on Wednesday. The firm said some deletion had taken place after a data preservation notice was issued to BoC by the Central Bank of Cyprus (CBC) on August 21, 2012. Investigators found no e-mail files, mailboxes or user documents on Eliades’ desktop computer. This, according to
the firm, could suggest that the computer was not used by Eliades or the hard drive was formatted or wiped by BoC IT after the former CEO left the bank or it was wiped using data removal software such as CCleaner installed on the computer. A&M said there were more gaps in the data collection. “We had significant gaps in the e-mail data received from BoC for the period 2007 to 2010, a key period for our scope of investigation,” the firm said. The reason was the lack of an e-mail archiving process before late in 2010 or early 2011, the time when e-mail systems were upgraded.
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