Cyprus Mail
Business

Company may have earned commission on banks’ capital needs

The CBC is set to be embroiled in another furore

A NEW front appeared to be opening against the Central Bank (CBC) governor yesterday as reports suggested that the contract of an international company hired by the regulator to provide various services included a special clause providing for commission depending on the amount of capital the banks would need — the higher the amount the bigger the commission.

Mega television reported on Monday evening that the CBC board had asked to see the contract signed with Alvarez and Marsal along with any other information to determine whether there was a clause providing that the company would receive commission based on the amount banks would need to recapitalise.

House Ethics Committee chairman Demetris Syllouris said yesterday he was told that A&M were seeking a further €10 million to €11 million in extra pay but that the CBC had found a way to deal with the request.

“So we will wait and see how they will handle it and then decide what we will do,” he added.

In a short announcement yesterday, the CBC said the agreement was being “legally examined.”

Non-executive board member Alexandros Michaelides did not shed any light on the matter.

“I don’t want to comment. There are differing opinions,” Michaelides told state radio.

The CBC had hired US-based A&M to lead a probe into the circumstances that led two of the island’s banks to seek state support.

A&M was also involved in restructuring the Bank of Cyprus (BoC), after the EU decided to recapitalise it by seizing deposits.

BoC also absorbed part of Laiki Bank, which was shut down as part of the island’s bailout agreement.

Syllouris said the committee aimed to complete its report on the causes that led the economy to collapse before the end of the year.

Everyone who has anything to say about the issue would be asked to testify, he said.

His comment came on the day reports suggested former Central Bank governor Athanasios Orphanides had refused to travel to Cyprus to appear before the committee.
Orphanides currently works in the US.

Syllouris said Orphanides did not refuse – he informed the committee he was not planning to come to Cyprus before Christmas.

The committee chairman said Orphanides could testify through teleconferencing if necessary.

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