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Cyprus

Bondholders make demands on third anniversary of haircut

Marking the third anniversary of the Eurogroup decisions that led to a haircut on uninsured bank deposits and the wiping out of capital invested in Cyprus’ two largest lenders in March 2013, bondholders of Bank of Cyprus and now-defunct Laiki Bank on Tuesday met various decision-makers in order to push their agenda.

In a statement, the bondholders’ association said the meetings were scheduled to mark three years since the first Eurogroup meeting on supporting the economy of Cyprus, at which “the government proposed the recapitalisation of banks with own means”.

A delegation of association members delivered resolutions to various bodies and officials, demanding vindication for turning their holdings into non-preferential bank shares as part of recapitalising the lenders.

The resolution handed to the President included a demand for the implementation of his pledge to compensate all bondholders, as well as his own instructions of September 9, 2014, to “compensate each bondholder who bought bank securities from the primary market with €100,000, irrespective of the haircut on any deposits, and issue interest-bearing, medium-term government bonds for the balance”.

Finance minister Harris Georgiades was asked to consider the association’s proposal to settle the issue out of court, following the country’s exit from the adjustment programme. Georgiades, the bondholders said, must stop recommending that bondholders resort to trials and courts.

“What is the point of trials and courts, when the Cyprus Securities and Exchange Commission, the Central Bank of Cyprus, and parliament, have all found that we were deceived,” the bondholders said.

“The Central Bank’s conclusion that ‘all non-institutional bondholders are considered defrauded, and there is no requirement for each of them to demonstrate having been defrauded’ is indicative.”

In a separate resolution handed to parliament, the association demanded that a House resolution passed unanimously last July is voted into law, and that a legislative proposal by House Speaker Yiannakis Omirou, by which outstanding loans are offset by bond holdings, is passed immediately.

Attorney General Costas Clerides was also asked to step in and exert his influence so that, in case an out-of-court settlement of the association’s demands is not found, adjudication of lawsuits filed is expedited.

Further, to ask the Justice and Commerce ministers to forward a bill on class-action suits to parliament.

“If this bill is passed, instead of filing thousands of lawsuits, our association will file a single class-action suit, on behalf of all its members,” the announcement said.

The Central Bank was asked to reaffirm that the loans given by banks with their own bonds as collateral are illegal, and the loans used to purchase new bonds are doubly illegal. It was also asked to transfer holdings in Laiki bonds to the Bank of Cyprus, so that bondholders can have the right to take the BoC to court.

Finally, the Bank of Cyprus was asked to restore the association’s members by offsetting all bond-backed loans with the bonds themselves, and stop pressuring bondholders for repayment.


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