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Cyprus

Bill to compensate Laiki depositors on way to House vote

Akel's Irini Charalambidou

Akel MP Irini Charalambidou said Monday she was pleased a bill compensating depositors of legacy Laiki bank would soon head to the plenum for a vote.

“It is with particular satisfaction that I have learned that the legislative proposal we jointly tabled with my colleague Chrysis Pantelides [a Diko MP] amending the bankruptcy law and facilitating the actions of the liquidator for ex-Laiki Bank, is expected to be passed unanimously by the House plenum.”

Charalambidou’s bill would fast-track the return of at least part of the moneys that legacy Laiki’s depositors lost when the bank went into administration in 2013.

The bill effectively amends the bankruptcy law, so that with a court’s permission different procedures may apply in compensating creditors of an insolvent company.

In the case of ex-Laiki’s depositors, seeking to recoup some of their lost savings, they’d be able to be represented en masse by the bank’s liquidator – rather than each one of them having to file a sworn statement with a court and then send registered letters to the liquidator, as is currently the case.

As things stand now, the liquidator would have to hire staff to process some 14,000 applications by legacy Laiki’s depositors. This would take too long.

Instead, under the new arrangement being proposed with the bill, the bank’s liquidator would set up an online platform where the depositors will login and enter their ID number and bank account information. Once the. process is complete, any refunds would be made automatically to their bank account

Whereas authorities already have the data on how much money each ex-Laiki depositor lost, the platform would bring all the information in one place, speeding up the process.

Nine years after the bank’s collapse, a liquidator has yet to be appointed for Laiki – also known as Popular Bank. The entity is still under administration. Meanwhile the bank’s assets have declined over time.

Charalambidou’s initiative has been welcomed by a group representing ex-Laiki bank depositors. However the head of the group also pointed out that Laiki’s assets are currently worth anywhere from €200 to €230 million.

Dividing this amount by the number of ‘haircut’ depositors would work out to each depositor getting back a mere 4 per cent of the savings they lost.

For context, the total savings in Laiki that were lost in 2013 came to €3.2 billion.

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