20 December 2013 09:16

The government yesterday strongly denied a statement by the Central Bank Governor that President Anastasiades was warned about the possibility of a ‘haircut’ on bank deposits prior to the bailout deal.
Governor Panicos Demetraides told Sigma TV on Wednesday evening that he had warned the President about that bleak possibility on the phone on March 6. And that he was ignored.
But the acting government spokesman slammed Demetriades (photo) saying: “Once again the Governor is stirring up false and distorted impressions about the President.”
Victoras Papadopoulos also said that the President’s first action after taking over the Presidency of the Republic on March 1 was to send a letter to the Governor with a list of questions on the state of the ailing economy and on the banking system.
On March 4, Anastasiades called Demetriades to his office for clarifications and that’s when the Governor also handed him a long and detailed memo that had absolutely no reference to a possible deposits’ haircut, he added.
“Even though the Central Bank had – by that time - prepared a bill that included the saving of banks through a bail-in,” Papadopoulos said.
Demetriades said he had called up Anastasiades to warn him because he felt it was his duty to do so. And that he was – ‘once again’ - ignored by the President.
Relations between the two men were rocky long before the Eurogroup’s decision in mid-March that bank deposits – insured and uninsured — should be seized to re-capitalise the island’s banks.
The proposal by the island’s international lenders – the EU, ECB and IMF - was promptly rejected by parliament in Nicosia.
And about a week later the Eurogroup withdrew the proposal and decided to close the island’s second-biggest bank, Laiki.
As well as to seize a big chunk (47.5%) of uninsured deposits in the Bank of Cyprus – the island’s biggest.
Despite the official denial, opposition parties yesterday went on the attack accusing the President and his economic team at the time of being woefully unprepared in countering this possibility.
Socialist Edek said in a statement that the incumbent government – despite big words that they were the ones best capable to steer Cyprus out of its economic crisis – was ‘tragically poorly prepared’.
“When the Financial Times were publishing a European Commission document in February 2013 clearly showing that the haircut possibility was under discussion, doesn’t this prove that both the former government as well as the incumbent one were aware of this possibility? They should have been,” Edek argued.


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