Over 50 depositors and shareholders of Cypriot banks are suing the EU and its institutions over losses they suffered when their deposits were seized to recapitalise lenders, it emerged on Friday.
The plaintiffs are seeking damages in excess of €20 million, according to lawyer Kypros Chrysostomides, whose firm has teamed with foreign experts to bring the case to court.
“Cyprus is the only EU member-state to date, to have been provided with financial assistance on the precondition of a ‘bail-in’ and other coercive measures,” the firm said.
It said it was the first time in the history of EU jurisprudence that the Luxembourg Court has been asked to decide whether the acts of the Eurogroup are attributable to the EU, thus raising the obligation for compensation.
The Eurogroup decided in March to close down Laiki Bank and seize deposits over €100,000 to recapitalise the Bank of Cyprus (BoC).
The lender has used 47.5 per cent of the deposits.
The claimants want compensation for losses suffered as a result of the Eurogroup decision, as well as depreciation – in both value and number – of their shares.
Depositors whose money was taken received equity in return.
Under the terms of the so-called haircut, the nominal value of all ordinary BoC shares was reduced from €1.00 each to ordinary shares of nominal value of €0.01 each.
“In particular, the claimants mainly challenge (by way of an application for damages) the March 25 Eurogroup decision to impose a ‘bail-in’ … as well as the acts of the European Central Bank, the Commission, and the Council in endorsing and implementing that decision,” a statement from the firm said.
The Eurogroup, and the EU face claims, primarily for grievous violations of the claimants’ right to property and of the principles of non-discrimination, protection of legitimate expectations, and the principle of proportionality, as prescribed by EU law.
The firm said defendants’ were normally expected to respond within two months, unless an extension was granted by the court.