Greek investors who lost millions when Cyprus seized bank accounts are suing and taking their case to an international arbitration court.
Their lawyers said they want to recoup losses suffered when President Nicos Anastasiades in 2013 – who campaigned against bank raids – authorized confiscation of 47.5 percent of accounts of more than 100,000 euros, which then was around $130,000.
That was done as part of a 10-billion euro (then $13 billion) bailout from international lenders who demanded blameless account holders bear a big part of the cost of a recovery program. Anastasiades promised to go after bankers whose mismanagement caused the crisis but reneged on that too.
Cyprus came close to financial ruin after its state banks bought up billions of euros in Greek bonds that were devalued 74 percent and in bad loans to Greek businesses that went belly-up during that country’s ongoing financial crisis.
Some 676 individual and institutional depositors and bondholders, asserting 434 separate claims, are seeking to recover losses they estimate at over 120 million euros ($135 million).
Cyprus imposed losses on unsecured deposits in Bank of Cyprus and now-defunct Laiki Bank in 2013. The bail-in rule kicked in when the International Monetary Fund and European Unon refused to put up enough funds to cover the recapitalization of Cypriot banks.
“We believe that Greek investors were singled out and discriminated against during the bailout – while Greek depositors were subject to extreme bailout measures, many public institutions of Cyprus were made exempt,” said Jay Eisenhofer, Co-Managing Director of law firm Grant & Eisenhofer in an emailed statement, Reuters reported.
The Cypriot finance ministry was not immediately available for comment.
Cyprus, a Eurozone member since 2008, was first to enforce the ‘bail-in’ rule, now an EU directive, requiring that under certain circumstances bank depositors would shoulder the cost of recapitalizing banks even if it’s not their fault.
The case has been filed with the International Centre for Settlement of Investment Disputes, an international investor tribunal affiliated with the World Bank.
The dispute will be adjudicated through binding arbitration, a statement from attorneys representing the investors said.