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Cyprus Supreme Court backs away from haircut lawsuits
June 7, 2013 / 12:31 PM / 4 years ago

Cyprus Supreme Court backs away from haircut lawsuits

NICOSIA, June 7 (Reuters) - Cyprus’s Supreme Court said on Friday it could not rule on lawsuits against the central bank seizing control of two of the largest commercial banks, which triggered big losses in depositors’ savings as part of an international rescue deal.

Complaints had been brought by about 50 customers of the two banks who lost money when the banks were seized.

In a decision taken by majority, the court ruled it did not have jurisdiction to handle recourses over the resolution of Popular Bank, which is being wound down, or over Bank of Cyprus, where large depositors have been forced to forfeit savings for equity stakes in the bank.

It ruled that lawsuits against the seizure of the banks came under the remit of private civil cases in other courts.

The Supreme Court, the most senior legal authority on the island which handles recourses against state institutions, was called to address whether it was competent to rule on the case, not to decide on the merits of the complaints.

Thousands of depositors lost millions when the central bank took control of the two commercial banks in March, forcing losses on uninsured deposits exceeding 100,000 euros. The losses were conditional on Cyprus receiving 10 billion euros in aid from the International Monetary Fund and the EU.

One Nicosia lawyer said he did not consider the Supreme Court case would have any effect for the hundreds of civil cases pending against the raiding of big depositors’ bank accounts to plug bank recapitalisation shortfalls.

“Having read the judgement I can say with respect it is not the best that legal science could produce. In all probability the principles it invokes will be confined to its own facts rather than become a precedent,” said Costas Velaris, a barrister who is assisting affected depositors.

Customers in Popular, also known as Laiki, have lost deposits exceeding 100,000 euros, while Bank of Cyprus clients are forced to see 37.5 percent of cash over the insurable threshold converted to equity, with the possibility that an additional 22.5 percent of their savings could also be converted. (Reporting By Michele Kambas; Editing by Pravin Char)

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