In an expected chain of events unfolding in the troubled Cyproit island, Antreas Artemis head of Bank of Cyprus, resigns as the chairman of the biggest bank of Cyprus.
Artemis complained in the resignation that his bank’s board of directors was not consulted when international authorities made the drastic move of selling branches of Bank of Cyprus in Greece.
In the last minute deal agreed on by ECB, IMF and EU over the weekend, Cyprus’ largest bank took a lesser fall as compared to Laiki, the second largest bank, which received the death penalty.
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Piraeus Bank of Greece has acquired operations of the three largest lenders in Cyprus, Bank of Cyprus, Laiki and Hellenic Bank. The Greek bank has said that the bailout of Cyprus supports Greece’s banking system and also helps Cyproit depositors, customers and staff.
According to Cyproit news agencies, the other reasons cited for Artemis’ resignation is the clause in the bailout deal that requires Bank of Cyprus to absorb all of Laiki’s debts and the appointment of a new bank administrator which was also done without discussion with the board.
Dinos Christofides was appointed as the new administrator of the bank who will supervise the restructuring program approved by the commission as part of the island’s bailout deal.
The 10 billion euros bailout puts a tax on deposits above 100,000 euros, the percentage that will be shaved off from the deposits is as yet unknown. As part of Laiki’s wrapup program, the insured deposits below the mentioned cap will be transferred to Bank of Cyprus while the uninsured deposits above 100,ooo euros in both banks will be taxed to raise 4.2 billion euros, as part of the 10 billion bailout orchestrated by the torika.
The bondholders and shareholders in Bank of Cyprus will have to contribute first to the recapitalization of the bank while the next in line will be the uninsured depositors.
Jeroen Dijsselbloem, euro zone finance chief, said at one point that the Cyprus bailout could become a template to handle other debt ridden economies in the EU, however later he retracted from the statement saying that the solution put forward for Cyprus was specific to its case.
The bailout deal hits Russia the hardest as a huge chunk of deposits in both of the largest lenders of Cyprus are held by Russian businessmen. More resignations in the top management are expected in Cyprus. Fitch has downgraded Bank of Cyprus to “restricted default” rating.