ATHENS, Jan 18 (Reuters) - Greek investment group Marfin (MIG) said on Friday it would take legal action against Cyprus, seeking compensation for the dilution of its holding in Cyprus Popular Bank after Nicosia nationalised the lender.
Popular, Cyprus’s second-largest bank, was nationalised in mid-2012 after its capital base took a severe hit from a writedown in Greek government debt, to which it was heavily exposed.
MIG, which had invested 823 million euros ($1.10 billion) in Popular, saw its 9.5 percent shareholding diluted to 1.5 percent as a result and wants restitution.
“MIG will send a notice of dispute to Cyprus. The law allows a six-month period for the two sides to resolve the dispute,” a MIG official told Reuters, declining to be named.
No immediate comment was available from the Cypriot government.
MIG said it would provide further details at a news conference on Jan. 23. An official added the company would go to an international arbitration tribunal if efforts to settle the case failed.
MIG expects other private investors in Popular Bank to become parties in the dispute notice, which will be formally served to the Cypriot government on Jan. 23.
Cyprus now owns an estimated 84 percent of Popular. The state’s attempts to save the country’s banks forced it to seek financial aid from EU partners and the IMF in order to recapitalise them and put its economy back on a stable footing.
The bailout is estimated at around 17 billion euros, equal to the entire output of the Cypriot economy.
Cyprus applied for financial aid last June but some euro zone states like Germany are uneasy about bailing out a country they say lacks financial transparency. ($1 = 0.7486 euros) (Reporting by George Georgiopoulos; Editing by Sophie Walker)