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Bondholders try to storm BoC headquarters

Bondholders try to storm BoC headquarters

By George Psyllides

OUTRAGED investors who claim they were duped into buying high-risk bonds tried to enter the Bank of Cyprus (BoC) headquarters in Nicosia on Tuesday after the lender’s brass declined to meet them outside.

They were stopped by police in riot gear as others pelted the building with tangerines, and tried to smash windows using an outdoor ashtray.

Flower pots were broken and bricks removed from the courtyard were dumped in front of the entrance.

Things calmed down when two representatives of the bondholders association were allowed inside to meet with BoC chairman Christis Hassapis and CEO John Hourican.

They were not satisfied however with the bank’s suggestion to discuss their demands next week.

The association rejected the proposal, warning that they would escalate their actions depending on the results of a meeting with President Nicos Anastasiades in the coming days.

“This is a warning; we are expecting the response of the Presidential Palace, to tell us on what basis to claim our compensation,” said Phivos Mavrovouniotis, head of the association.

Many bondholders in the island’s major banks claim they were duped into investing high-yield bonds without being informed of the risks, and some have sued the banks because they were allegedly not properly informed of the risks

The total amount put in securities across Cyprus’ banks is said to be about €1.4 billion – €600 million concern BoC and €800 million at Laiki

Laiki Bank stopped paying interest on the bonds after incurring losses from a Greek sovereign debt write-down in 2011. The bonds offered an attractive return of 7.0 per cent in some cases. They were later converted to shares.

Laiki is in the process of shutting down while BoC is struggling to get back on its feet after being forced to raid customers’ deposits to recapitalise.

Mavrovouniotis said they expect the government to guarantee financing for them, the way they did on Monday for BoC.

“We owe to other banks and we cannot pay. Patience has limits. We are expecting a political solution,” he said.

It was the last time extension they gave, Mavrovouniotis said.

“The next day we will launch a relentless fight for vindication, through court suits, continuous demonstrations and bank closures,” he said. “The cost they will incur will be a hundredfold.”

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