Cyprus Mail

Out-of-pocket bondholders turn on ‘forgetful’ finance minister

A demo earlier this year by bondholders

By Angelos Anastasiou
The bondholders’ association issued threats of unspecified future action against Finance Minister Harris Georgiades on Thursday, in reference to remarks he made concerning their demands in a radio talk-show last Saturday.
In a statement, the bondholders, who are demanding that the government offers them restitution for the losses they incurred after the bonds of Bank of Cyprus and now-defunct Laiki Bank they invested in from 2006 to 2011 were wiped out in March 2013, quoted Georgiades as saying “there is no consideration for the reimbursement of either the ‘haircut’ depositors or the bondholders with taxpayers’ money. If there is [any consideration], then it is one between the bank and its customer, and can only be resolved in court”.
After its collapse, Laiki Bank was split up and folded into Bank of Cyprus, with Laiki’s bonds remaining with Legacy Laiki – slated for liquidation – whereas Laiki’s loans, given against the bonds as collateral, were moved to the Bank of Cyprus. As a result, the BoC now demands repayment of the loans, but the bonds backing them are worthless.
The association’s demands are estimated to exceed €1 billion in total.
In a meeting with President Nicos Anastasiades last February, bondholders were told that the finance minister would be representing the government in the discussion with the bondholders, but no solid commitments were made. The day before that meeting, the Cyprus Mail was told by a government source that “it is very difficult for the government to pay bondholders with taxpayer money”.
“The association reminds Mr Georgiades that, during a meeting with President Nicos Anastasiades early in 2015, in the presence of the finance minister, when asked who will repay Laiki’s bondholders, the president replied that, because Laiki was a state bank, compensation would be paid by the state,” the bondholders claimed in their statement.
Following the failing bank’s recapitalisation with €1.8 billion of government money in May 2012, the state became the majority shareholder in the bank until its demise in March 2013.
“Therefore, the omnipresent and omni-forgetful or ignorant minister either had his ears closed or is purposely pretending to be unaware of his president’s commitment,” the bondholders charged on Thursday.
“This marks not the first time he does this, as recently, following his intervention, an agreement between the Cooperative Central Bank (CCB) with their employees’ union fell apart.”
Earlier this week, bank employees union ETYK claimed an informal agreement with the CCB’s management over the renewal of collective agreements until 2018 was overturned days after it was clinched, because Georgiades had raised objections behind the scenes to the CCB’s bosses. In a statement, the finance ministry denied any involvement in the talks.
“Yet more proof that the minister forgets or is unaware of things is the fact that we have repeatedly asked to meet with him so that we can inform each other of developments, and we are still waiting,” the bondholders’ statement said before closing with a direct threat.
“We inform him that the patience of our recession-hit, suffering members is wearing thin, and time is his enemy. He will soon realise what we mean.”

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