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A Legacy of Deception


When, and if, history ever bothers to concern itself with the legacy of the Anastasiades Government in Cyprus it should title the chapter as the “The Era of Deception”. If there is one single pattern emerging from the six years or so of Anastasiades’ rule it is one of unkept promises and make-believe. And this is not something that we can ascribe to only the President himself, but rather one that permeates the whole ruling party and even those who are closely associated with it. While the previous government was in many respects inadequate, the newly elected elite proved to be masters of trickery and a rare breed of self-serving pundits practising crony capitalism.

One can cite many instances in the Anastasiades’ handling of the national issue where this pattern of behaviour is evident, such as his almost complete transformation at Crans-Montana. However, I will refrain from discussing these and, instead, concentrate on some of the issues relating to the economy.

First, the deposit haircut comes to mind. The President not only went back on an “unequivocal commitment” to the electorate a few months earlier, but he put forward adubious proposal whereby Cyprus was to apply a tax on all deposits as an alternative to a haircut on all uninsured deposits. This would have infringed his own government’s guarantee for deposits of less than €100,000. As various commentators remarked, this move would have enabled Anastasiades to limit the bail-in on deposits of over €100,000 (about half of which belonged to Russian oligarchs) to a mere 9.99%. The proposal was rejected by Parliament, but the Russian government was also against such a move as the following quote from the book ‘The Panama Papers’ reveals:

“…during the euro crisis in 2013, the Russian government was so fiercely opposed to a ‘haircut’. The plan was to use this approach to trim all deposits with Cypriot banks, including RCB [Russian Commercial Bank]. ‘We were given to understand in no uncertain terms by those in the very highest positions of power in Russia that if we touched RCB the reaction would be unlike anything we had ever seen before’, the head of Cyprus’ centrist party said…” (Obermayer, 2016).

RCB was indeed exempted from the bail-in that was finally applied only to the Bank of Cyprus, which was merged with the good part of Laiki Bank. What followed next was a mastery of deception to deliver the newly merged entity into the hands of the elite customers of some of the main law and accounting offices. Although “bad” Laiki had the largest stake in the new entity, as it owned 18% of its shares –representing claims of creditors of Laiki- Anastasiades’ government acquired control of that stake by changing the resolution legislation. By doing so, the Ministry of Finance was able to use the Laiki shareholding to appoint the Bank of Cyprus’ new directors who were decided through wheeling and dealing that involved the law firms representing wealthy foreign clients, political parties, the Church and bank unions. As a result of this behind-the-scenes arrangement, a Russian oligarch who was a former client of the Law Office of Anastasiades and Co emerged as the new Vice President of the Bank of Cyprus.

But the grand deception plan could not be completed until the Central Bank of Cyprus (CBC) approved the new board members as ‘fit and proper’. A change of the CBC Law was swiftly implemented thus resulting in a shift of power from the Governor to the CBC board, which was largely controlled by the government. Also, in a well-documented conversation, Anastasiades reminded the then Governor, using rather colourful language, that he should not even consider opposing his choice of individuals to replace the Interim Board of the Bank of Cyprus in September 2013 (Demetriades, 2017).

Another major debacle concerning the Bank of Cyprus related to the relocation of the parent company to Ireland in 2016. At the time, I was a member of the Board of the Cyprus Stock Exchange (CSE) and I was one of a few who consideredthe move to Ireland both suspect and fraught with many risks for Cyprus and the minority shareholders. We were invited at the time to submit our views to a Parliamentary Committee which was considering the proposal. There were at least two pages of concerns in a document I had submitted, as requested, to Parliament. We were all invited as members of the Board of CSE to attend the workings of the Committee and I was astonished that not even one of the issues and concerns I raised in that document was discussed. I subsequently asked some members of the Committee who said that they had not received my document. The person responsible in Parliament to whom I had personally handed the letter confirmed that it was passed on to the Chairman of the Committee (and president of the ruling party).

The proposal was quickly approved by all the relevant bodies, such as the Cyprus Securities Commission and the Cyprus Stock Exchange of which I was still a member. As if by magic the split vote had all of a sudden become unanimous with only my vote against. An Extra-ordinary General Meeting of the Bank of Cyprus shareholders (who were very poorly informed about the impact of this on their shares) was very quickly convened and it was mission accomplished before anyone could begin to understand, let alone question, what had happened.

However, the biggest fiasco is the recent Co-op to Hellenic Bank deal. This was a master plan like no other. The Co-op Bank was in dire straits even before the re-election of Anastasiades. The Government not only knew about it but it was, to a large extent, responsible for it due to the poor decisions it had taken in the appointment of the board and management of the Bank. During the election campaign they methodically suppressed any discussion of the Bank on the pretext that it would have made any problem bigger and harder to handle. Even the Auditor General who prepared a damning report about the many wrong doings he found at the Co-op felt compelled to keep it under wraps until after the election.

As pointed out in some of my publications (2018, 3-6) the deal reached with Hellenic Bank is fraught with many risks and comes at a very high cost for the Cypriot tax payer. The question is who gains and who pays? And was it indeed inevitable or, as presented the ruling party, the best of a number of bad alternatives?

The Co-op Bank to Hellenic Bank deal was by no means an accident that just happened. It had been planned, and in my opinion, deliberate and involved many people collaborating for it to take place. Anyone with an independent mind and some basic knowledge of banking can clearly see that it was conceived and executed by a small group of people, some of whom, stand to benefit from the huge upside and give aways handed over to Hellenic Bank through this deal. The high point of this is the bond and cash that were supposedly put together in order to ease the emerging liquidity crisis at the Co-Op Bank only some months before the deal was concluded.

These assets were created “artificially” by the Government who, as stated by the Auditor General in a Parliamentary Committee, was in fact borrowing back and redepositing a number of times its own initial cash deposit with the Co-Op. This has created a bond/cash asset and a matching deposits liability for the Co-Op of about €3.5 billion. These were not existing assets of Co-Op as were the loans or other bonds it had on its balance sheet before the liquidity crisis. The bond and cash assets thus created should never have been made part of any deal to sell the bank. Moreover, the assets thus created should not have been separated from the liability of the corresponding matching deposits which were left behind and most likely now the Government cannot fully recover as they are set against junk assets.

The argument that was put forward that the Government paid the money and bond to Hellenic in order to acquire the loan assets is another deception. The Government did not need to buy what it already owned. Moreover, the fact that these have been put up as collateral is also meaningless as the first recourse on whatever these assets maybe worth is on the deposit claims in any case. Finally, the risk on the deposits that was supposedly passed on to Hellenic remains with the Government as almost all these are under €100,000 guaranteed deposits.

Last, but not least, mention should also be made of Estia, which is still in the works. This is a plan put in place hastily and which is designed to give the impression that the Government is now fulfilling its social responsibility by helping those most in need as a result of the bail-in.  But as I have argued else where (Savvides, October 2018) the scheme is intended to enable the banks to recover a multiple (of up to 5-6 times more) of what these loans are really worth. Most of these loans are in fact almost fully provided by the banks. If these loans were to be put up for sale, as some of the other loans have been recently, they would fetch a lot less than, say the 24%-25% that the Bank of Cyprus sold one such loan portfolio.

In fact, the authorities in Europe do not allow the government to buy loans from commercial banks at such prices as this would be deemed as State Aid to the banks. The Estia scheme, in other words, is designed to enable the participating banks to collect far more than they could have recovered from these loans. The fact remains that the Estia scheme, as it currently stands, is indeed subsidizing the banks through tax payers’ money (Manison and Savvides, July 2018). In a recent article (Savvides, October 2018), the Estia scheme is described as “manna from heaven for the banks”. In truth, it is not really from heaven, but from the law-abiding tax payer.

The bottom line is that this Government perceives the meaning of politics to be almost synonymous to the word deception. And they have elevated this practice to almost every aspect of politics. But good politics and leadership in particular is not about deceiving anyone, especially your citizens. It is about having strong moral values and in fact being honest and totally committed to them. And it is about leading your people by example. The example this Government gives is one of treachery and make belief. That inevitably only leads towards further erosion of the foundations of society and results in even more economic misery and national degradation. This, I am afraid, will be the legacy of the Anastasiades Presidency.


  1. Obermayer, Bastian. (2016) The Panama Papers: Breaking the Story of How the Rich and Powerful Hide Their Money (Kindle Locations 4380-4384). One world Publications.
  2. Demetriades Panicos, A Diary of the Euro Crisis in Cyprus: Lessons for Bank Recovery and Resolution, (October 2017), Springer or Palgrave.
  3. Savvides, Savvakis C., Socialising the Losses and Privatising the Gains (The Case of Cyprus Five Years After the Bail-in of Bank Deposits) (April 30, 2018). Accountancy Cyprus, Vol. 130, May 2018. Available at SSRN:
  4. Savvides, Savvakis C., The Alternative Way to Deal with the Cyprus Co-Op Bank 'Socialising the Losses and Privatising the Gains – Part 3' (June 29, 2018). Available at SSRN: or
  5. Savvides, Savvakis C., Too Bad for the Tax Payer: 'Socialising the Losses and Privatising the Gains – Part 2' (June 17, 2018). Available at SSRN: or
  6. Savvides, Savvakis C., Cyprus Economy in Wonderland (2018). Accountancy Cyprus, Vol. 131, June 2018. Available at SSRN: or
  7. Savvides, Savvakis C. and Manison, Leslie, The Estia Debacle (July 5, 2018). Available at SSRN:
  8. Savvides, Savvakis C., Estia Scheme: ‘Manna from heaven’ for the Banks, (October 2018), Available at:

Savvakis C. Savvides is an economist, specialising in economic development and project financing. He is a former senior manager at the Cyprus Development Bank and has been a regular visiting lecturer at Harvard University and currently at Queen’s University. Author page: