SYKALA, the association that represents some of the Laiki depositors that lost all money in their bank accounts in excess of €100,000 when the bank was placed under resolution in March 2013, has developed into a forceful pressure group. Its representatives have had meetings with the president and have repeatedly been invited to House finance committee meetings to air their grievances against the administrator of legacy Laiki who was not keeping them informed and was working at a slow pace.
The sympathy shown to SYKALA was perfectly understandable as its members were victims of the bailout who lost a big part of their savings when Laiki went under and all they were asking was to be able to cut their losses; they were not seeking compensation from the taxpayer. As a result DISY and DIKO decided to draft legislation that would transfer the power to appoint an administrator from the Central Bank to Laiki’s creditors (SYKALA could not be named in the law).
On the surface, this may have seemed a sensible and morally correct decision, but closer examination raised several questions. Should the power to appoint an administrator be given to a disparate group of individuals who might have different objectives from each other? Who would be in charge of this group and would the people who lost the most money have the biggest say or would this be given to SYKALA because it is better-organised than the rest of the depositors? For instance, the man appearing as SYKALA’s spokesman told the Sunday Mail he did not know what amount of bailed-in deposits the association represented.
Why do the politicians assume that the depositors would be united and allow the administrator they appoint to do a better job than an administrator appointed by the Resolution Authority? Administration by committee is a recipe for delays and indecision rather than for effective action. According to the law, creditors would be given a year in which to call a general meeting and appoint an administrator. What would happen in the meantime, would all work done by the current administrator be suspended?
Another problem, regarding the relevant bill, arose and deputies had to amend it. As the bill stood it gave the right to the depositors of FBME that was also under resolution to have a general meeting and appoint their own administrator. To prevent this, the bill was changed to apply, by name, to Legacy Laiki which could be a violation of the constitution as it is discriminatory. Need we also mention the suspect amendment to the resolution law that was discussed on Monday and would prevent Legacy Laiki from coming under the authority of the European Commission’s Single Resolution Mechanism at the beginning of next year?
There is a growing sense that deputies, in their attempt to satisfy SYKALA, will cause much bigger problems for the administration of Laiki than currently exist.