Cyprus Mail

Report into Laiki’s emergency liquidity assistance sent to attorney-general’s office

The final report into the 70 requests made by now-defunct Laiki Bank to the Central Bank of Cyprus (CBC) for emergency liquidity assistance (ELA), totalling €9.8 billion, has been completed.

The audit service report was delivered to the attorney-general’s office for further handling on Monday.

The CBC first authorised ELA for Laiki in September 2011 in relatively modest increments, but by mid-2012 total amounts approved had soared to €9.8 billion, where it hovered until the bank’s demise in March 2013.

The audit service’s report, a statement said, sought to examine whether due procedure was followed at the CBC when approving the requests, which were categorised in five periods book-ended by significant events that shaped the bank’s future.

The first period begins with the first decision to approve ELA for Laiki on September 27, 2011, and ends in February 2012, at which point total ELA given was €4.5 billion.

The second period covers events until May 16, 2012, when an interim government was appointed in Greece while the bank frantically tried to find investors willing to inject capital in the troubled lender. During this time, ELA fell to €3.8 billion.

The third category ends on July 3rd, 2012, when the European Central Bank decided to suspend Laiki as counter party for monetary policy operations, during which time ELA skyrocketed to €9.8 billion.

The fourth period includes negotiations between the Troika and the Cypriot government, until preliminary agreement was reached in November 2012.

The fifth and final stretch of time covers the period to the two Eurogroup decisions in March 2013, which wound down the bank and dumped all ELA on the Bank of Cyprus.

It is noted, the audit service said, that the report focuses on the two main aspects of granting ELA; namely, the assessment of Laiki’s solvency and the valuation of the collateral it posted.

The report was delivered to the attorney-general as evidence in the ongoing police investigations on the collapse of Cyprus’ economy.

Therefore, it added, the audit service will make no further comment on this issue.



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