Cyprus Mail

‘BoC policies were an accident waiting to happen’ court hears

By Angelos Anastasiou

Stock-market investors association head (PASEHA) Michalis Olympios on Wednesday claimed former Bank of Cyprus CEO Andreas Eliades was the man who brought the lender down with his decision to restart a Greek-bond purchase programme in late 2009.

Michalis Olympios was testifying at the trial of five former BoC officials and the lender itself on charges of conspiracy to manipulate the market and mislead investors.

The court also heard that Politis journalist Dionysis Dionysiou informed Olympios via email of the Bank of Cyprus’ decision to withdraw €50,000 worth of advertising from the newspaper and demand the discontinuance of Olympios’ weekly contributions, after running a story that was particularly critical of Eliades.

Defence lawyers argued that announcing a request for a government bailout could have led to a run on the bank, which Olympios ceded.

He noted that the economic climate in 2012 was extremely unstable, but added that the bank’s decline had started in 2009.

“The eye of the storm was circa the end of 2011, when privately-held Greek sovereign debt was trimmed,” he said.

“What followed in 2012 and 2013 was an accident waiting to happen.”

When defence lawyer Polis Poliviou argued that the ‘haircut’ on Greek bonds was a single dramatic event that left the Bank of Cyprus reeling with shortfalls, Olympios agreed, but noted that the Central Bank sent a letter to the lender in March 2010, warning it of the significant risk it had assumed.

“When others sold Greek debt, we were buying it,” he said.

During cross-examination, Olympios said the bank bought €600 million of Greek government bonds in December 2009, and more in February 2010 – perhaps in March 2010, too, adding that the Central Bank’s first warning letter came in March 2010.

Grilled by defence lawyer Efstathios Efstathiou on the performance of former Central Bank governor Panicos Demetriades, Olympios said he had been a good governor, tough on banks, but that he was faced with an extremely serious situation concerning Laiki Bank as soon as he assumed his duties.

When Efstathiou posited that Demetriades was the man who allowed Laiki to absorb €9.5 billion in emergency liquidity assistance, leading to the collapse of the banking system, Olympios said no.

“The bigger chunk of that was authorized by [predecessor] Athanasios Orphanides, and most of that had been requested by Laiki’s Greek subsidiary,” he said.

The trial resumes on Tuesday, when former Demetriades’ deputy Spyros Stavrinakis takes the stand for the prosecution.

Related Posts

Group seeks state land for stray cats

Anna Savva

Number of cases in ‘subsidies scam’ rises to 49, two women re-remanded

Staff Reporter

Former TC leader Eroglu admitted to hospital

Staff Reporter

Rehabilitating hormone replacement

Gina Agapiou

Glimpse a world beneath the waves

Anna Savva

Over 900 traffic fines issued in 48 hours

Staff Reporter


Comments are closed.