Cyprus Mail
Cyprus

Haircut rumours persist after co-op chief steps down

By George Psyllides

THE OUTGOING chief of the Cooperative Central Bank (CCB) yesterday rubbished rumours that a haircut on deposits was on the cards, assuring that the cooperative movement had ample capital and liquidity.

Erotokritos Chlorakiotis sought to allay fears that deposits in cooperatives would suffer the same fate as those on the island two biggest banks.

Those fears, along with the rumours doing the rounds lately, became stronger on Thursday after he announced he was stepping down some 18 months before his contract expired.

“It is a joke, if not criminal depending on the source, for these rumours to continue,” Chlorakiotis told a news conference.

He said some of the cases had been reported to police but did not elaborate further.

On Monday, the Central Bank of Cyprus announced that cooperatives could need up to €1.5 billion to cover their shortfalls until 2015.

The cash will come from the island’s €10 billion bailout.

“Are we going to recapitalise the cooperatives twice?” the 66-year-old Chlorakiotis said.

The outgoing cooperative official said their capital adequacy and liquidity was sufficient.

“Do they impose a write-down when you have a capital adequacy level of 12 per cent or 26 per cent? We have no losses; we did not make investments that accumulated losses, which could not be covered,” he said of the big exposure to Greek debt of the island’s two biggest banks – the now defunct Laiki and Bank of Cyprus.

Chlorakiotis added that the CCB had €1.0 billion deposited with the ECB to ensure that depositors get their money whenever they need it.

“We have the liquidity and we have the capital adequacy so why would they impose a haircut on our deposits?”

He also rejected other suggestions that he was stepping down because of his disagreement with rolling over state debt.

Chlorakiotis said the government has already paid off €656 million worth of bonds held by cooperatives.

Co-ops hold an additional €950 million of state debt, most of which matures next month.

And he rejected suggestions that his early retirement was linked to his family having millions in loans.

“I personally feel there is nothing wrong regarding loans possibly taken out by my family,” he said, adding that there had not been any preferential treatment.

Chlorakiotis stressed that he was “retiring” not “resigning” on September 30, to pave the way for a new general manager who will guide the movement through the new state of affairs created by the terms of the island’s bailout.

“I feel that I am not abandoning anything; I have completed my work,” he said.

Managing the situation would take many years, he said, and “if I were 55 I would not leave because I would have enough years. I am 66 however, and I think I am doing the right and prudent thing to open the way for a new general manager.”

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