Attorney-general appeals court ruling on Laiki Bank depositors’ compensation

The attorney-general’s office said Thursday it has appealed a ruling by Limassol district court that found in favour of depositors with now-defunct Laiki (Popular) Bank whose uninsured savings got wiped out in the 2013 haircut or bail-in.

In a statement, the AG’s office said it was challenging the entirety of the judgment, handed down by Limassol district court on November 30 last year.

The appeal challenges the court’s finding that the Republic (the state) bears responsibility for the collapse of the banking sector in 2013, which led to the haircut on deposits. The appeal also disagrees that the Republic is liable to compensate depositors who suffered a haircut.

Back in November Limassol district court had ruled in favour of a group of plaintiffs – Russian and Belarussian nationals – jointly suing Laiki Bank, the Central Bank of Cyprus (as the banking regulator) and the Republic of Cyprus.

Subsequently Laiki was dropped from the list of defendants in the lawsuit, due to the fact the bank is in liquidation and thus unable to compensate the plaintiffs.

The court’s decision therefore concerned the Central Bank and the Republic of Cyprus.

Essentially the ruling gave back to the plaintiffs all the savings they lost in the bail-in – any and all uninsured deposits over €100,000.

The Central Bank and the Republic (the state) were held responsible for negligence, dereliction of duty as well as misrepresentations that led to the collapse of Laiki Bank.

On March 16, 2013, the Cypriot government agreed with the ‘troika’ of international lenders a €10 billion rescue package. Under the loan deal, no amount was to be used to re-capitalise Cypriot banks, instead introducing the method of the bail-in.

On March 19 the Cypriot parliament rejected a proposal that would have imposed a one-time ‘tax’ on all deposits in all banks. Three days later, parliament passed a series of laws that greenlit the resolution of Laiki and Bank of Cyprus.