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Cyprus

Bondholders stage peaceful protest outside BoC (Updated with Ackermann response)

By Angelos Anastasiou

In what appears to be a dramatic change of tone, the bondholders’ association – a group of non-institutional investors who bought Bank of Cyprus and Laiki Bank bonds from 2006 to 2011, only to see them wiped out when the banks ran into trouble – has asked the heads of the Bank of Cyprus and the Central Bank of Cyprus to co-operate in coming to an agreed solution.

On the sidelines of the BoC shareholders’ annual general meeting (AGM) on Tuesday, the bondholders held yet another protest outside the lender’s headquarters, but seem to have abandoned their incendiary language and confrontational stance, which had, in previous occasions, resulted in closing streets and cutting off traffic, and throwing rocks and eggs at the BoC building, breaking window panes and causing security guards minor injuries.

After months of employing such tactics and warning of ever-escalating measures, the bondholders seem to have realised they weren’t getting anywhere – even an audience with President Nicos Anastasiades proved fruitless – and staged a peaceful protest, in which they handed BoC chairman Dr Josef Ackermann, as well as CBC governor Chrystalla Georghadji, resolutions asking for their help in meeting the association members’ demands.

“Because your recent interview has revealed some sensitive aspects of your character, we inform you that many of our members lack even the necessities of life, while those who were in a better condition saw their dreams for the education of their children and grandchildren disappear as a result of the nullification of the value of their bonds,” the bondholders wrote to Ackermann, appealing to his sense of justice before attempting to sweeten the deal.

“If you are a sensitive person, the people of Cyprus are a thousand times more sensitive. This will translate to the large number of deposits that our relatives and friends will repatriate to the Bank of Cyprus.”

The tone of the Georghadji resolution was less conciliatory, but still far from previous inflammatory communications directed at the Central Bank.

“If the banks are the perpetrators of the series of crimes committed against us, your bank and your predecessors were the instigators, since inadequate oversight […] allowed them to recapitalise themselves with our money, seize our deposits, and leave us ruined,” it read.

“We do not care who the CBC governor responsible for our misfortune was; what we know is that moral responsibility lies squarely with the Central Bank. The reputation and credibility of your independent institution rests with you.”

Inside the AGM, association chairman Phivos Mavrovouniotis took the floor to speak in favour of an out-of-court settlement between the bank and bondholders.

“Many of the bondholders will be dead before the courts make a ruling,” he said, referring to what the association deemed a “snail’s pace of Cypriot justice”.

But Ackermann and Polis Poliviou – the bank’s lawyer – said it’s just not doable.

“What happened was really tough,” the Swiss banker said.

“We have engaged in dialogue but the legal framework in Cyprus does not allow a different approach. There is no legal background [for restitution], and quite frankly we don’t have the luxury, [as] the bank remains vulnerable.”

Poliviou added that he was a shareholder himself, but noted that the loss of wealth has come from the government, the CBC, and authorities outside Cyprus.

“Unfortunately, this has come from a law of the state, which the bank cannot ignore,” he said.

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