Cyprus Mail
Cyprus

Bank mulls extension of retirement scheme deadline

By George Psyllides

THE BANK of Cyprus (BoC) will look into extending the deadline of a voluntary retirement scheme for a few days pending the completion of the bail-in process.

The matter was discussed by the House Finance Committee, which questioned officials about the employee provident funds and the uncertainty surrounding the matter.

Cyprus had to wind down one lender, Laiki Bank, and use, or bail-in, customer deposits exceeding €100,000 to prop up BoC, as part of the bailout agreement.

Provident funds were also affected by the bail-in, which has not been completed yet, and the uncertainty is hindering the lender’s retirement scheme.

Central Bank (CBC) Governor Panicos Demetriades told MPs that an asset evaluation at the BoC will be complete by Monday and the bail-in possibly by the end of the month.

“We are pressuring so that the final rate of the bail-in is set by the end of the month,” Demetriades said.

So far, 37.5 per cent of uninsured deposits have been seized and an additional 22.5 per cent was blocked and could follow the same fate.

From the remainder, depositors can only use 10 per cent.

Reports yesterday suggested the final bail-in percentage will be around 50 per cent.

Finance Minister Harris Georgiades said he had discussed getting an advance from international lenders to cover the provident funds of bank employees who chose to leave BoC under the retirement scheme.

However, to be able to ask for the advance, the final rate of the bail-in must be finalised.

Georgiades reiterated that the haircut on the provident funds of Laiki employees will be the same as that of their BoC colleagues.

Provident funds are not covered by the deposit protection scheme, but the government has pledged to limit the losses of provident fund members to around 25 per cent of the amount they would have received before the EU decision to restructure the two Cypriot banks.

If for instance the haircut at the BoC reaches 50 per cent, workers will immediately receive the rest. Employees will receive the additional 25 per cent when they reach retirement age.

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