Cyprus Mail

Arbitration ruling in Laiki case vindicates central bank

The Central Bank of Cyprus

By Stelios Orphanides

The Central Bank of Cyprus said that it feels vindicated for its action with respect to Laiki Bank after the International Arbitration Court issued its ruling last week dismissing the claims for €1.1bn in damages filed by a group of investors.

The central bank’s actions in question include its decision in late 2011 to fire the lender’s executive management, including the former strongman of Laiki, Andreas Vgenopoulos who was among the plaintiffs and died in November 2016, the bank’s recapitalisation in May 2012, and the imposition of resolution measures ten months later, the bank supervisor said.

“The decision analyses the lengthy written testimony filed by the Republic and the plaintiffs and inter alia, vindicates the Central Bank of Cyprus’ action,” it said.

The central bank added that it will continue to make resources available to defend Cyprus in the context of other investment disputes that have been brought against the island in other arbitration court abroad concerning the financial sector, in cooperation with the law office and the ministry of finance.

One such case is the one filed by the owners of FBME Bank against the Republic of Cyprus, seeking €1.5bn in compensation, after the Central Bank of Cyprus placed the Cyprus branch of the bank four years ago under administration and subsequent resolution, after US authorities described it as a financial institution of primary money laundering concern.

The favourable outcome of the case is owed to a considerable degree to the contribution of Attorney-general Costas Clerides, the Skadden, Arps, Slate, Meagher and Flom (UK) LLP, their associates and the Ministry of Finance, as well to the central bank’s handling, the bank supervisor added.

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