Following the Eurogroup decision on March 25, uninsured depositors (over €100,000) in Bank of Cyprus will take losses up to 60%, while they will be given shares. The Bank is managed by an administrator who oversees the restructuring process, as the CBC acting as Resolution Authority has sacked the Bank`s senior management and the Board of Directors. The interim Board will take over until the share holders meeting convene in September to elect the new Board. Following the Eurogroup decision, Cyprus imposed capital restrictions in a bid to protect the island`s banking system.

Speaking to CNA Minister of Finance Haris Georgiades said that the finalization of the restructuring process in Bank of Cyprus is an important step towards the normalization of the situation in the banking system.

Georgiades had yesterday lengthy consultations with the CBC Governor Panicos Demetriades and Attorney-General Petros Clerides focusing on the Bank of Cyprus and the issue of the deposits to be exempted from the haircut in BOCY. "The government`s view was and remains that the resolution process in Bank of Cyprus should be completed as soon as possible and we agree with the CBCB on this issue. We work to implement this very important aim within the next few days as an important step towards the full normalization of the situation in our banking system and the absolute restoration of confidence," he added.

Georgiades noted the appointing of a Board in the Bank is one step towards this direction and I believe that the announcement will be made early next week.

On the issue of the deposits to be exempted from the haircut, Georgiades said there is a array of issues to be managed in consultation with the Troika (European Commission, European Central Bank and the IMF). He reiterated that the catalog of the deposits to be exempted should be further narrowed. CBC Governor has also warned that if the list of exempted deposits increases the haircut on uninsured depositors in Bank of Cyprus will also increase. Georgiades also stressed that the government aims to loosen capital restrictions and to gradually abolish them altogether.

Source: Financial Mirror