CYPRUS MAIL

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Cyprus Mail www.cyprus-mail.com

Wednesday, March 27, 2013

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BoC staff panic after confusion Misunderstood Central Bank announcement sparks protest By Stefanos Evripidou

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HE GOVERNMENT yesterday ran to put out the fire it accused the Central Bank of starting over the future of the Bank of Cyprus (BoC), highlighting the growing rift between the presidential palace and the CB governor. A short Central Bank announcement on the appointment of a special administrator for the BoC yesterday morning sparked all-out panic among Bank of Cyprus employees that the island’s largest lender awaited the same fate as Laiki (Popular) Bank - a wind down. Within hours, hundreds of distraught BoC employees gathered outside the Bank of Cyprus’ headquarters in Nicosia before moving their demonstration to the neighbouring Central Bank building, shouting for the resignation of CB governor Panicos Demetriades. Finance Minister Michalis Sarris rushed to the Central Bank to bang out a short announcement clarifying that the Bank of Cyprus would undergo restructuring and internal recapitalisation, converting big depositors’ savings into shares. As a result of this process, the European Central Bank (ECB) was committed to provide liquidity for BoC so the bank’s liquidity

will not be affected by the transfer of Laiki’s effective debt to the ECB, amounting to €9.2 billion sucked out of the Emergency Liquidity Assistance (ELA) programme to keep Laiki afloat. Government spokesman Christos Stylianides said the confusion created in the morning by the CB’s failure to clarify the difference between the winding down of Laiki and the restructuring of the BoC was a “big mistake”. “Unfortunately, there were communication errors. A Central Bank temporary order was issued effectively marrying winding down and restructuring as if they were the same thing. “This issue was not properly explained and created panic not only among BoC employees but also the wider public,” said Stylianides. He noted that it also created problems with the bank’s international partners, inevitably causing problems to its prestige and prospects. “The government would have liked to see a clarification in the CB statement on appointing a special administrator (for BoC) so we wouldn’t have to see what happened as a result,” said the spokesman. Later in the day, Demetriades and Sarris held a joint press conference to

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STUDENTS ALSO HIT THE STREETS

Thousands of secondary-school and university students marched against the bailout in Nicosia yesterday shouting slogans against Germany and the troika (AFP) FULL STORY PAGE 4

Russians consider lawsuits over Cyprus losses By Megan Davies and Katya Golubkova RUSSIAN businesses and banks that face losses from the European Union’s bailout of Cyprus are considering legal action but may have a hard time making a case, say lawyers who are combing through treaties to find strategies to recover funds. Big depositors - many of them Russian - face losses of up to 40 per cent as the result of a so-called ‘bail-in’ to back €10 billion in EU financial

aid to stabilise the Cypriot banking system. “It’s worth trying, it’s not going to be easy, its not going to be a one-off, 24-hour court case, but the nature of the action itself sounds like expropriation,” said Andrey Goltsblat, managing partner at Moscow-based law firm Goltsblat BLP. There could be a basis to sue either Cyprus or individual banks, say lawyers who have been contacted by current and prospective clients seeking redress. “People are just frustrated and ... are trying to find a way to get their

money off Cyprus,” said Goltsblat, who said that two clients - one in Russia and a second Russian client residing in Cyprus - had inquired about legal options. Steven Philippsohn, partner at London-based law firm PCB Litigation, said three major banks based in or around Russia had asked about the possibility of legal action. “We have been contacted and we are monitoring the situation and will respond to them when we have further news,” he said.

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