Delegation of the Cyprus Chamber of Commerce, Industry (CCCI) and the Federation of Employers and Industrialists (OEV), accompanied by prominent businessmen, met with Troika technocrats (European Union, European Central Bank and the IMF), in Cyprus to review the implementation of the Memorandum containing the conditions associated with the granting of financial assistance.

Agreed betweenthe Cypriot authorities and the Euro area Finance Ministers (Eurogroup) on March 25, the Cypriot bailout included the winding down of Cyprus Popular Bank, Cyprus` second largest lender, whose assets were transferred to Bank of Cyprus, the island largest lender, which has entered a consolidation process. So far 37.5% of uninsured deposits in Bank of Cyprus have been converted to equity, whereas a due diligence audit which would determine the final haircut percentage is due to be delivered in the coming days. Capital controls have been imposed since late March, which have hampered economic activity in the island. Following the Eurogroup decisions economists express doubt as to whether Bank of Cyprus will survive.

"The survival of Bank of Cyprus is not an option," CCCI Chairman Phidias Pelides stressed, in statements following the meeting. "Our main problem is the lack of confidence in the banking system. Therefore the Troika should act towards the restoration of confidence in the banking system," Pelides added, noting that following the Eurogroup decisions Cypriot companies have trouble importing goods on credit, as their suppliers request cash payments. Pelides said the Troika should assist towards granting more liquidity to the Cypriot economy. He said that the Troika technocrats listened to their concerns but expressed no views on the issues discussed. "They just listened and took notes," Pelides went on to say.

On his part OEV`s Assistant Director General Michalis Antoniou said the concern is that the lifting of capital restrictions should be at such a pace that would not create viability problems to the Cypriot banks and especially the Bank of Cyprus. "We should strike the right balance between the pace of lifting capital restrictions and the protection mainly of the Bank of Cyprus from a possible bank run," he said, adding that preventing a bank run is attached to the restoration of confidence in the Bank of Cyprus. Antoniou said that both CCCI and OEV request from the European Central Bank to secure unlimited liquidity to the Bank of Cyprus when the capital restrictions in Cyprus are lifted.

Along the same lines, Nicos Shacolas a prominent Cypriot businessman, said confidence in the Cypriot banking system should be restored as soon as possible and especially in the Bank of Cyprus. He said that banks should proceed with the restructuring of loans to the private sector, be they large, medium or small businesses. Shacolas also pointed out the need for the provision of liquidity to the economy, noting that mature projects cannot proceed as they cannot be financed.

Source: Financial Mirror