De­posit hair­cut “could have been averted”, says Or­phanides

Financial Mirror (Cyprus) - - FRONT PAGE -

For­mer Cen­tral Bank Gov­er­nor Athana­sios Or­phanides is back in town, giv­ing tes­ti­mony in par­lia­ment over the bank­ing cri­sis, say­ing that the Christofias ad­min­is­tra­tion could have averted the hair­cut on de­posits and that im­por­tant facts were with­held from the suc­ces­sor govern­ment.

Or­phanides drew the ire of the op­po­si­tion AKEL party that grilled the for­mer cen­tral­banker over his state­ments, as he also blamed of­fi­cials at the Cen­tral Bank for al­low­ing the sale of the Cypriot banks’ branches in Greece, re­sult­ing in the col­lapse of Laiki, and the near-melt­down of Bank of Cyprus and Hel­lenic.

He said that the AKEL ad­min­is­tra­tion and his suc­ces­sor, Pan­i­cos Deme­tri­ades, pur­posely in­flated num­bers as re­gards the bank’s cap­i­tal needs, main­tain­ing that the com­mu­nist party only wanted to blame the banks for the eco­nomic col­lapse.

“The hair­cut could have been averted even as late as the first days of the newly-elected Anas­tasi­ades govern­ment, the sale of Cypriot banks’ branches in Greece to Pi­raeus Bank had been planned months in ad­vance, the PIMCO re­port had been guided, and the Cen­tral Bank of Cyprus, as well as the Euro­pean Cen­tral Bank, had been aware that pro­vid­ing Laiki with emer­gency liq­uid­ity [ELA] was il­le­gal, at least dur­ing the last months of its ex­is­tence.”

“The CBC’s ac­tions in the months lead­ing up to the March 2013 melt­down are of cru­cial im­por­tance, be­cause they in­flated the banks’ sup­posed cap­i­tal needs,” he said.

“At the end of June 2012, when the govern­ment re­alised that an ad­just­ment pro­gramme was in­evitable, it falsely claimed that it was nec­es­sary only be­cause of the bad shape of the banks. The point is that, by bloat­ing the cap­i­tal re­quire­ments fig­ure to EUR 10 bil­lion, we left the Troika with no op­tions other than a hair­cut,” Or­phanides said. The House Ethics Com­mit­tee will re­sume next Tues­day with fur­ther state­ments by Or­phanides.

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