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Cyprus

Non-binding resolution calls for reimbursing Laiki depositors

Marfin Popular Laiki Bank

By Angelos Anastasiou

A PROPOSAL for a resolution by parliament in favour of fully restoring the seized deposits of now-defunct Laiki Bank was discussed behind closed doors on Monday by the House finance committee.

Parts of the failed lender, including guaranteed deposits up to €100,000, were folded into the Bank of Cyprus following the March 2013 Eurogroup decisions to wind down Laiki and recapitalise the Bank of Cyprus via the forced conversion of uninsured deposits – over €100,000 – into low-tier bank equity.

But Laiki depositors were hit even worse as they lost all of their uninsured deposits, as opposed to those at the Bank of Cyprus, who were forced to contribute almost half their deposits over €100,000 to recapitalise the lender.

According to the proposal, tabled jointly by socialists EDEK and the Green party, the House of Representatives calls on the government to immediately follow through on its earlier promises and devise and implement a plan to ensure the full restitution of affected depositors within a stated timeframe, with a view to restoring their pre-conversion status.

Speaking to reporters after the closed committee session, chairman Nicolas Papadopoulos said the resolution will be taken to Thursday’s plenum so that parties can offer their views.

The Greens head Yiorgos Perdikis welcomed the fact that a majority of finance committee members viewed the resolution in a positive light.

House resolutions are not legally enforceable and are little more than formal tools for applying political pressure on the executive.

“This is a resolution that extends a plea to the government, which has no real value to depositors, but calls on the government to find fair and practical ways, starting today, to compensate depositors who saw their savings vanish overnight,” he said.

One category of these depositors – “mainly foreign nationals”, according to Perdikis – has already been reimbursed by being granted Cypriot citizenship.

But acknowledging that “we can’t give Cypriots citizenship”, Perdikis said that the government may wish to offer other kinds of rights and entitlements to Laiki’s haircut depositors, so that gradually, and in accordance with the so-called economic recovery, “they can be reimbursed commensurately”.

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