NICOSIA, July 28, (Xinhua) -- Cypriot authorities and international lenders are still locked in tough negotiations on Sunday over the final size of a haircut on Bank of Cyprus (BoC) deposits despite earlier reports that they have already fixed it at 47.5 percent.
The haircut was imposed by the Eurogroup and the International Monetary Fund at a meeting on March 25 as part of a bailout of 10 billion euros (13 billion U.S. dollars).
The Central Bank of Cyprus (CBC) which was appointed as resolution authority for BoC initially converted 37.5 percent of deposits over 100,000 euros into bank share and blocked an additional 22.5 percent as a buffer until a final estimate was made based on the bank's balance sheet.
Negotiations on the final size of haircut on large depositors started between a delegation of the Cypriot Ministry of Finance and a combined delegation of CBC and international lenders on Saturday morning and resumed on Sunday.
Sources familiar with the negotiations said the Ministry of Finance insisted on a 39.6 haircut which would ensure a 9 percent Tier 1 core capital ratio provided for by the bailout memorandum.
However, CBC and International lenders were reported to insist on a 49.5 percent loss for large depositors so as to ensure additional liquidity for BoC till the end of the memorandum period at the end of 2016.
The state broadcaster initially reported that a compromise of 47.5 percent was reached but later on Sunday afternoon revised its report saying that the marathon talks were continuing and had shifted from the Ministry of Finance to the Central Bank headquarters.
State run Cyprus News Agency also quoted a Ministry of Finance source as saying that no agreement has yet been reached on the size of the haircut and that negotiations were continuing on technicalities.
It gave no reason for the change of the negotiations venue but added that Finance Minister Haris Georgiades could join the talks.
The Central Bank of Cyprus was appointed by the European Central Bank as resolution authority to control and direct the restructuring of BoC and the winding down of Cyprus Popular Bank, also known as Laiki. The Bank of Cyprus took over Laiki with both its assets and liabilities, including a 9.2 billion euro debt in emergency liquidity assistance from the European Central Bank.
Negotiators representing the European Commission, the European Central Bank and the IMF, collectively known as the troika, are in Cyprus to report on how an adjustment economic program is being applied so as to enable the release of the second loan tranche of about 3 billion euros after a September 13 Eurogroup meeting.
They will also give the go ahead for the termination of a resolution status of BoC as of July 31, when the large depositors-turned-shareholders will officially become its new owners entitled to choose their own board.
According to data released by Central Bank of Cyprus, deposits held in Cypriot banks dropped by another 5.3 billion euros in June. Total deposits were 50.669 billion euros in June, compared to 56.020 billion euros in May, 57.370 billion euros in April and 70.772 billion euros in June last year.
Working under 40 degrees Celsius
Feedback
RSS
