The parliament will vote on Thursday on a draft bill which provides for the participation of representatives of bailed-in depositors on banks’ board of directors, the Cyprus News Agency reported on Monday citing a lawmaker.
The rationale behind the draft legislation proposed by DIKO aims at empowering “trimmed depositors of Bank of Cyprus and Laiki to participate in the board of directors of the bank, which they helped come out of the crisis with their own deposits,” the Cyprus News Agency reported, citing Angelos Votsis, lawmaker of the populist party, who is also vice-chairman of the parliamentary finance committee.
Votsis, who is standing for re-election in May’s parliamentary elections, added that all political forces including DISY will support the initiative, which will offer two seats at the Bank of Cyprus’s board of directors to bailed-in depositors.
As part of Cyprus’s March 2013 bailout terms, customers at Bank of Cyprus saw 47.5 per cent of their uninsured deposits turned into equity while those at Laiki, as the defunct Cyprus Popular Bank was known -whose operations were absorbed by Bank of Cyprus-, lost all their deposits in excess of €100,000.
Trimmed Laiki depositors -who together with other creditors- are beneficiaries of a 9.6-per-cent stake in Bank of Cyprus owned by legacy Laiki, which in turn is managed by a special administrator appointed by the resolution authority, a body comprising the Central Bank of Cyprus’s board of directors. An attempt by Laiki depositors in November 2014 to have a representative elected in the Bank of Cyprus failed as a majority of shareholders rejected it.
Marios Mavrides, a lawmaker of DISY who teaches finance at the European University of Cyprus, expressed doubt that the bill, if passed, will be ever implemented.
“It’s simply unconstitutional,” Mavrides said, adding that it is up to shareholders to decide who will get a seat in a company’s board of directors and not up to the parliament.