* Cyprus c.bank inquiry expected to last months
* Authorities give list of cash transfers to parliament
* Euro exit would cost decades in living standards -minister
By Karolina Tagaris
NICOSIA, April 8 Cyprus's central bank confirmed
on Monday it will extend an inquiry into the banking crisis that
has crippled the island to fully cover Cyprus Popular Bank
, nationalised last year because of heavy losses from
A central bank-commissioned probe leaked last week made
reference to Popular's purchase of Greek government bonds, while
focussing on the island's largest commercial bank, Bank of
Central Bank of Cyprus Governor Panicos Demetriades told
lawmakers on Monday the inquiry would move on to Popular and its
Greek bond buys.
"It is expected to be completed in the next few months," he
Cyprus agreed a 10 billion euro bailout deal from the
European Union and International Monetary Fund designed to
untwine it from a banking sector that has all but crumbled in
the past month.
In stark contrast to previous euro zone bailouts, depositors
with more than 100,000 euros in Cyprus being forced to pay to
recapitalise their banks, badly hit by their exposure to Greece.
Despite the onerous terms, Cyprus had no other option and
any discussion of leaving the euro zone was out of the question,
Finance Minister Harris Georgiades said at the same meeting of
"I would like to make this clear: There is no Plan B... An
exit from the euro, and I underline this, would equal a much
bigger haircut (loss) not only on big depositors but on the
entire economy," he said. "The living standards of every citizen
would go back decades."
Cypriot banks were shut down for two weeks. They reopened in
late March to currency controls and a cash withdrawal limit of
300 euros per day.
Fuelling public disquiet are disclosures of major shifts of
capital out of Cyprus days before the island's banking system
was effectively locked down on March 15.
Demetriades, speaking to the financial affairs committee of
parliament, said he had sent to another committee, the ethics
committee, a list of major transfers. That list was due to be
discussed on Tuesday.
"It details outflows from the two banks, of over 100,000
euros," Demetriades said.
Cyprus will wind down Popular, with some of its assets
transferred to Bank of Cyprus. Bank of Cyprus will also slap
large depositors with heavy losses to pay for its own
Demetriades said a clear picture of Bank of Cyprus's
requirements would be known by the end of June.
The first instalment of the investigation, by consultants
Alvarez and Marsal, drew criticism that it did not focus on the
role of Popular in the crisis, which was kept on a funding
lifeline for months as Cyprus attempted to negotiate terms of a
When the European Central Bank threatened to pull its aid to
Popular, Cyprus buckled and agreed to accept tough bailout
The inquiry would focus on the purchase of Greek bonds and
expansion strategies pursued by Popular in previous years,