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Sylikiotis charges ECB was involved in low price for bank branches

MEP Neoklis Sylikiotis

By Angelos Anastasiou

The sale of Greek operations of the two largest Cypriot banks – Bank of Cyprus and now-defunct Laiki – was the result of a bilateral agreement between Cyprus and Greece to protect both countries’ banking systems, and the European Central Bank was not involved in the particulars of the deal, ECB President Mario Draghi said in a letter on Monday.

He was responding to a question posed to him by Cypriot MEP Neoklis Sylikiotis and his Italian colleague Fabio De Masi. The two MEPs had asked Draghi to inform them when the ECB had planned the sale in question to Greek Piraeus bank, and whether there is any truth to press reports that the Cypriot banks were heavily pressured to accept the sale at an extremely low price.

“I stress that the ECB was at no point in time party to the negotiation of the sale price, and it is not for the ECB to justify the business case for the sale of the Cypriot banks’ Greek branches,” Draghi responded.

“As you will be aware, the sale of the Greek operations of the two largest Cypriot banks was the result of a bilateral agreement between Cyprus and Greece, the aim of which was to protect the stability of both the Greek and the Cypriot banking system.”

In a statement making the exchange public on Tuesday, Sylikiotis argued that Draghi was merely attempting to abdicate the ECB from responsibility.

“In truth, the ECB did interfere, as is proven by its own working document,” the AKEL MEP said.

He was referring to a confidential memo published by The Press Project last month, which seemed to indicate that Cyprus was to receive a €10 billion bailout loan only on condition that Cypriot banks’ Greek operations were sold to a Greek bank at a fraction of their value.

“The fact that the Greek branches were sold exactly as described in the document, as well as the specific characteristics of the potential buyer listed in it, prove the ECB’s direct involvement in the sale,” Sylikiotis added.

But Draghi’s response was fully in line with former Central Bank of Cyprus governor Panicos Demetriades’ statement to the Cyprus parliament, in which he testified that “the sale price and the terms of sale were agreed on a political level between Cyprus and Greece during the two March 2013 Eurogroup meetings”.

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