Bank of Cyprus made clear on Tuesday that it will not accept collective compensation schemes with regard to capital securities that have been wiped out as part of the bailout of the banking sector in 2013.
According to IMF figures, €600 million of capital securities have been converted to shares in March 2013 as part of Cyprus` €10 billion bailout. Additionally 47.5% of deposits over €100,000 have been converted to equity in the controversial deposit haircut to recapitalise Cyprus` largest bank. The bank has exited from resolution process in the summer of 2013, raised €1 billion in capital from foreign investors and passed the ECB stress test, but still faces an accute problem of non-performing loans.
The Association of Capital Securities calls for a comprehensive off-court settlement, arguing that securities holders were tricked into buying complex banking products. “However the bank notes that capital securities holders may certainly pursue any claims before the courts and the bank will abide by any such decisions.”
“It is with great regret we inform you that any proposals relating to any collective or general compensation schemes cannot be accepted of effected by the bank as there is no adequate legal basis that will support such actions,” the bank said in a letter to the association signed by the Bank of Cyprus board chairman Josef Ackermann and senior independent board member Michael Spanos.
“Moreover the bank is not in a financial condition to proceed in any such actions. Notwithsanding the legal aspects of the matter, the bank is not currently in a financial position to satisfy the proposals made,” the letter adds.
Noting the bank is fully aware of the social aspects of the matter as well as the severe economic conditions that many Cypriots, including many capital securities holders are now facing, the letter adds that “the bank together with other parties adopts and will continue to adopt various actions that help in alleviating the pain and economic problems of any socially affected and vulnerable categories of the people.”
CNA/GS/EC/2015
ENDS, CYPRUS NEWS AGENCY