Cyprus seeks PSI dam­ages

Kathimerini English - - Focus - SOTIRIS NIKAS

De­funct Cypriot bank Marfin Pop­u­lar is re­sort­ing to the In­ter­na­tional Cen­ter for Set­tle­ment of In­vest­ment Dis­putes (ICSID) and seek­ing dam­ages of more than 4 bil­lion eu­ros from Greece over losses from the PSI debt restruc­tur­ing con­ducted in 2012.

The claim was re­vealed yesterday by Cypriot news­pa­per Poli­tis and ap­pears to have a po­lit­i­cal side given that the bank, com­monly known by its pre­vi­ous name, Laiki, is state-con­trolled. How­ever, the chances of it win­ning its case are very slim due to the res ju­di­cata in a case brought by a Slo­vakian bank to the ICSID.

Laiki’s claim is founded on the in­ter­state agree­ment be­tween Greece and Cyprus that the liq­ui­dated bank cites and con­cerns the mu­tual pro­tec­tion of in­vest­ments. That pro­tec­tion did not ap­ply in 2012 in the case of the Greek state bonds held by Laiki, which suf­fered a hair­cut and took sig­nif­i­cant losses that con­trib­uted to its down­fall.

Given that a year later the bank was pro­nounced de­funct and its de­pos­i­tors lost a ma­jor share of their money ow­ing to the hair­cut im­posed on all Cypriot lenders, the cur­rent Cypriot ad­min­is­tra­tion de­cided to act against Greece mainly us­ing a po­lit­i­cal cri­te­rion and not a fi­nan­cial one – i.e. to show it is ex­haust­ing all avail­able means for the com­pen­sa­tion of banks from the PSI.

At the same time, 676 Greek de­pos­i­tors are de­mand­ing that Nicosia cover their losses re­sult­ing from the hair­cut on Cypriot bank ac­counts, namely at Laiki and Bank of Cyprus. The claim has been lodged at the same court, the ICSID, and claimants in­clude pri­vate de­pos­i­tors, in­sti­tu­tional in­vestors and bond­hold­ers.

Of the trips that Greeks made, the vast ma­jor­ity of 94.3 per­cent con­cerned trav­el­ing for per­sonal rea­sons, while 5.7 per­cent was for pro­fes­sional pur­poses, ELSTAT data showed.

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