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Little joy from officialdom for duped bondholders

Angry bondholders demonstrating outside the Bank of Cyprus headquarters after the crisis

By Angelos Anastasiou

THE bondholders’ association came away from a meeting with President Nicos Anastasiades with little more than a promise for quick adjudication of individual claims, association president Phivos Mavrovouniotis said.

The bondholders of both Bank of Cyprus (BoC and ex-Laiki Bank, who claim they had been duped into investing in products that promised extraordinarily high yields, were hoping for a more radical solution to emerge from the eagerly-sought meeting with the President yesterday.

Speaking after the meeting, Mavrovouniotis said that the association’s representation suggested an out-of-court settlement proposal to the President, which would allow for quick resolution and the restoration of bank credibility. However, he said, it seems that the courts will be engaged, after all.

But while initial thoughts pointed towards referring individual disputes to the arbitration court, it emerged that this procedure would be inefficient, Mavrovouniotis explained.

“Therefore, the President and his partners have decided that six district judges be initially appointed – two each in Nicosia and Limassol, and one each in Paphos and Larnaca – solely tasked with judging bondholder cases daily,” he said.

If any plaintiffs are judged to have been defrauded, the second stage will call for the securing of funds to pay for restitution.

Mavrovouniotis expressed the belief that the BoC would be able to pay any court-mandated restitution, but said that ex-Laiki bondholders would likely find themselves in limbo. He reported Anastasiades’ pledge that the government would take this matter up at a later stage, once figures for restitutions and funds raised from the resolution of ex-Laiki become available.

The bondholders’ representatives will present the government decisions to the association’s general assembly for final decisions but expressed reservations about the wisdom of the decision.

“I can’t say that this was the arrangement we envisioned,” said Mavrovouniotis. “We predict that filing thousands of lawsuits against a struggling BoC that is fighting for its survival will cause it much trouble.”

On the other hand, he said, many bondholders face huge financial problems and need to cover legal expenses.

“We want to hope that the President, per his assurances, will not let all these people down in the medium term, once the country has escaped the severe financial crisis,” he concluded.

The association’s vice-president Stavros Yiallourides was less diplomatic, saying that the association would not settle for a court decision, which at best will serve as a “nice frame on the wall.”

“We are owed a convincing explanation as to where bondholders, and especially those of ex-Laiki bank, will be repaid from,” he said.

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