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Cyprus

Government ready to discuss compensating those who lost funds in bail in

Finance minister Haris Georgiades

The government said on Tuesday it is ready to discuss a proposal where a fraction of the government’s primary surplus would go toward compensating depositors and bondholders wiped out in the 2013 ‘bail-in’.

A proposal floated by DIKO leader and MP Nicholas Papadopoulos, it envisages diverting 10 per cent of the primary surplus, over a period of 20 years, to compensate those stricken in the March 2013 financial meltdown.

Speaking on the state broadcaster, Finance Minister Harris Georgiades said he found the idea appealing and was willing to discuss it.

But, the minister qualified, it was not a cure-all.

Currently the primary surplus stands at some €450 million. Therefore, 10 per cent of that would work out to €45 million per year, or €900 million over a 20-year period.

Georgiades pointed out that the total losses suffered by bondholders and others amount to around €9 billion, so even if Papadopoulos’ proposal were implemented it would only cover 10 per cent of that amount.

Nonetheless, he was prepared to further explore the idea.

That suggestions are now being made on how to tap the primary surplus reflects on the government’s sound fiscal policies, which allowed a surplus to be generated in the first place, said Georgiades.

Last week the House passed a bill allowing the face value of the now worthless bank bonds held by a bank’s client to be offset against his or her loans.

The bondholders of the Bank of Cyprus and the now defunct Laiki Bank had been clamouring for the bill.

However it’s understood that the president will refuse to sign off on the law on the grounds it is unconstitutional.

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