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Cyprus

House greenlights €7.4m to close Cyta hole in Greece and pay down loans

CYTA, the state-owned telecom that avoided privatisation under pressure from political parties, will be receiving €7.4m for their 2017 supplementary budget, following parliamentary approval on Friday.

Passed by 26 votes in favour, 18 against and four abstentions, €2m will go towards to the loss-making Greek arm Cyta Hellas and the remaining €5.4m to pay off loans to Bank of Cyprus, according to a report prepared by the House Finance committee.

Although Cyta had initially budgeted €4m for Cyta Hellas in cash to cover liquidity needs, the head of Cyta sought to try and guide the mother company away from providing any cash to the Greek subsidiary for 2017.

With this mindset still in place, the €2m is to be budgeted in case the notion of zero funds to Cyta Hellas does not work out.

Cyta’s €5.4m supplementary budget for Bank of Cyprus (BoC), along with their current budget of €15.6m will be used, if required, to pay off Cyta Hellas loans it took from BoC and Marfin Laiki.

The state owned telecom is currently in the midst of negotiations with BoC to reach an agreement for paying off Cyta Hellas’ loans by contributing to loans amounting to €21m which were taken out in 2010 and 2011 from Marfin Laiki and BoC that were linked to Cyta deposits and pension funds.

After the haircut on deposits, the telecom requested this be offset with the Cyta Hellas loans, but this was never agreed upon.

Consequently, legal actions were filed for the settlement and repayment of Cyta Hellas loans from the deposits in question.

The proposal allows both Cyta and Cyta Hellas, as well as the staff pension fund, to maintain their rights or claims in relation to the lawsuits filed against the bank following the haircut deposit.

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