By George Psyllides
BANK of Cyprus (BoC), the island’s biggest lender, could come out of administration by the end of July, MPs heard yesterday, as authorities complete its recapitalisation using people’s uninsured deposits – over €100,000.
As a condition for receiving €10 billion in bailout funds from the EU, Cyprus was forced to agree to resolve its second-biggest lender, Laiki, and recapitalise BoC using a large chunk of deposits over €100,000.
In return, depositors will receive equity at the new BoC, which will also absorb certain assets that belonged to Laiki.
Depositors have so far lost 37.5 per cent of their money with a further 22.5 per cent frozen by the Central Bank (CBC) to be used if necessary.
From the remaining 40 per cent, the CBC only released 10 per cent.
MPs discussed the possibility of creating an escrow account and move the 22.5 per cent there in a bid to release the bank from administration earlier.
That solution however is not favoured by international lenders, collectively known as the troika – EU, European Central Bank, International Monetary Fund.
“The heads of the troika are cautious over the escrow account,” CBC official Michalis Stylianou told the House Finance Committee yesterday.
Stylianou said the troika sees BoC exiting administration after evaluation of its assets, along with those of Laiki.
The CBC is in the final stage of selecting a firm to carry out the evaluation, which should be ready by July 15.
The evaluation will determine how much of the 22.5 per cent will be used to recapitalise the bank.
After that, the troika agreed that BoC can come out of administration in two weeks instead of three months as was the initial plan.