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SOS by foreign banks in Cyprus

19/03/2013 15:17
The outflow of deposits from the foreign banks is estimated to reach 50% if the bill on the haircut is approved, representatives of the Federation of International Banks in Cyprus warned.

Speaking before the House Finance Committee, representative of the Federation, Marios Anastasiou said that any haircut on deposits of foreign banks means disaster.

He claimed that 25 of the 26 international banks maintain operations in the form of branches and with a different regime.

He noted that after the passage of the bill, international banks in Cyprus will put a padlock in their branches.

"It should be understood that in fact Cyprus has banks and not a banking institution. All banks, Cypriot and foreign, are placed under one umbrella and are pruned. How can there be credibility in the banking system of Cyprus?”, he stressed.

According to Mr. Anastasiou, the bill is unconstitutional and while all banks are “in the same basket”, the impact on international banks will be higher than that on the Cypriot.

"Foreign banks," he said, "are not responsible" and this decision will be disastrous.

Another representative of the Federation described the bill as unacceptable, arguing that there are other solutions.

He claimed that the haircut of deposits means the end of Cyprus as an international financial center. “50% of deposits of banks are lost”, he said.

On behalf of the Association of Cyprus Banks, it was stressed that the non-passage of the bill will bring about dramatic effects on the banking system and the economy.

At the same time, it sought to include in the bill and legal safeguards for the coverage of banks and the board members in relation to the implementation of the legislation.

As mentioned, a similar provision was included in the law on the nationalization of Cyprus Popular Bank.