Cyprus Mail

Fund to help Laiki depositors to be voted this week

The bill establishing a Solidarity Fund will be brought to the House plenum by the end of the week, MPs said on Tuesday.

“One way or another, the bill will be voted on this coming Friday,” chair of the House finance committee Angelos Votsis told reporters.

The legislative proposal is a joint effort by the Disy, Diko and Solidarity parties – although other parties are expected to submit amendments on the House floor.

The stated purpose of the Solidarity Fund is to provide relief to legacy Laiki depositors and bank bondholders whose investments were wiped out in the 2013 bail-in.

Although the fund has yet to go live, parliament has already allocated to it around €55m.

The fund’s finances are to come from state grants and proceeds from the use of state property. To date, 14 state-owned plots of land worth some €100m have been earmarked.

For months, lawmakers were discussing a number of issues, such as whether relief beneficiaries would include corporations as well as individuals. Granting relief to corporations, which are legal entities, could clash with EU law prohibiting state aid.

Another question was what would happen with the multitude of civil lawsuits filed by bondholders: whether the petitioners would be required to withdraw their claims once the Solidarity Fund goes live.

The total amount in compensation claims by bondholders in court cases comes to an estimated €400m.

Earlier, the government had made it clear that the assistance to be given to the victims of the 2013 haircut was not ‘compensation’, as that might suggest the state was legally liable for the haircut.

The government has acknowledged that only a fraction of the bail-in losses would be covered.

The March 2013 events saw the loss of €7.7bn in deposits (amounts over €100,000). In addition, anywhere from €1.2bn to €1.5bn in contingent securities were converted into equity (bank shares) of practically zero worth.

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