Cyprus Mail 31 March 2025 - by Elias Hazou
Bank depositors and bondholders whose savings were wiped out in the 2013 ‘haircut’ will receive a fraction of their losses as compensation, officials said in parliament on Monday.
The House finance committee was discussing the status of the National Solidarity Fund, set up years ago to give something back to those affected by the bail-in.
In March 2013, big savers with the Bank of Cyprus had 47.5 per cent of their uninsured deposits (any amount over €100,000) converted into shares, under the terms of an international bailout.
Under the bailout programme between Cyprus and its lenders, large depositors paid for the recapitalisation of the Bank of Cyprus, heavily exposed to debt-crippled Greece.
As for Laiki (Popular) Bank, all uninsured deposits there were wiped out, and the lender was wound down and its operations folded into the Bank of Cyprus.
Andreas Karaolis, a finance ministry official, said around €2 billion in ‘haircut’ losses – depositors and bondholders – have been reported by affected people. The data was gathered by an online platform, which opened for applications in December 2023 and closed in May 2024.
By comparison, at the moment the solidarity fund has assets worth €260 million.
“Based on the balance in the fund, not full but partial restitution of the losses should be expected,” Karaolis told MPs.
The €260 million does not include immovable property owned by legacy Laiki.
To date, said the same official, the finance ministry has verified 80 per cent of the claims filed. People whose claims were verified will be contacted shortly.
Actual disbursements to affected people have not begun. Karaolis said that authorities are currently at the stage of devising a disbursements scheme.
Adonis Papaconstantinou, representing the association of depositors of legacy Laiki – known as Sykala – insisted that they should get compensation from Bank of Cyprus since it is a going business concern.
He argued that Bank of Cyprus had “benefited” from the bail-in and the transfer to it of Laiki’s assets.
Meantime the association of the ‘old’ shareholders at Bank of Cyprus – as opposed to the ‘new’ shareholders, meaning the haircut depositors and bondholders who received bank shares of a nominal value – are also seeking financial restitution. A rep for the association said they have written to the finance ministry but received no reply.
Officials said this category of people would be dealt with separately.
Andreas Papadopoulos, head of the association of former employees at Laiki, spoke of problems these individuals face with their private pensions.
These workers lost their jobs in 2013 but have yet to receive about 75 per cent of their pension entitlements. According to Papadopoulos, some of these people are on “the verge of poverty”.
Christiana Erotokritou, chair of the House finance committee, noted her satisfaction with the government’s assurances that payouts would be expedited.
At the same time, she added, it has been 12 years since the ‘haircut’ and “people are still suffering the consequences.”
Disy MP Savia Orfanidou called for the disbursements to start as soon as possible.
