Andreas Eliades, the former chief executive of the Bank of Cyprus accused the authorities on Monday of making the bank a scapegoat to cover their own shortcomings in running the island's economy.
"If the government had acted to restore fiscal imbalances, even in the first quarter of 2012, the measures would be infinitely less painful then they are today," said Eliades, who was CEO from 2005 until mid-2012.
Bank of Cyprus lost 1.8 bln euros in Greek government bonds as the three leading banks lost vast amounts of money when their bond holdings were wiped out in an EU-sanctioned writedown in early 2012, a move agreed by all European Union member states including the then Cypriot government.
"We couldn't predict there would be an 80% writedown in bonds," Eliades told the judicial inquiry investigating the Cypriot crisis.
He said the decision to buy Greek bonds wasn't his, but sovereign debt had always been considered a safe-haven asset.
Eliades, who resigned under pressure from the central bank, said Cyprus would not have needed any external help if it had controlled runaway deficits.
He said that having failed to arrest a fiscal slide, authorities decided to shift blame onto banks for being heavily exposed to Greece.
"Some people wanted to prove that the banks and the bankers were to blame for the financial crisis," he said.
In a written deposition to the committee overseeing the inquiry, he also claimed the central bank was instrumental in scuppering the Bank of Cyprus's sale of its insurance divisions in June 2012 to raise requisite capital, while he added that consultants Alvarez & Marsal and global bond managers Pimco were also responsible for misleading information.
Eliades also referred to the loss-making investment in Russia, where BOCY bought out the 90% controlling stake in Uniastrum bank, saying that former executives were as much to blame for this investment.
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