President of the National Economy Council Christophoros Pissarides has said that very soon many of the uncertainties surrounding the Bank of Cyprus will be clarified.
Speaking after this morning’s Council meeting under President of the Republic Nicos Anastasiades, and referring to the haircut on uninsured deposits, Pissarides said there is an agreement that will be announced soon by the Central Bank of Cyprus, noting that with the agreement the future of the Bank of Cyprus will be put on the right track.
He added that the National Economy Council considers the agreement positive, and that the restrictions on the banking sector will be gradually eased, every six months for the next couple of years, which was the best way to handle the issue and take into consideration the reaction of the market before the next measure was lifted.
Lifting all restrictions at once would be risky, he pointed out.
Asked about the amount to emerge from the haircut on uninsured deposits, Pissarides said it would be enough for the recapitalisation of the banks, according to Eurogroup calculations.
Regarding the next steps for the Bank of Cyprus to regain trust, Pissarides said bonds must be issued and the new shareholders must elect the new Board, then the discussions about splitting the bank into a commercial and mortgage bank must be clarified, with the first meeting of the new shareholders placed around the end of August.
Pissarides said the Council examined various issues, mainly the Bank of Cyprus and fiscal policy matters.
Referring to the implementation of the Memorandum Cyprus has agreed with its international lenders (IMF, European Central Bank and European Commission) on a bail out, Pissarides said "this is going as best as possible under the circumstances," adding that the economy was on the road to recovery and had already absorbed the initial shock.
"We see things improving," he noted.
Cyprus and its international lenders (the European Commission, the European Central Bank and the IMF) agreed late March on a €10 billion bailout programme, which provided for a haircut on uninsured deposits in the island`s two largest banks.
The Cyprus Popular Bank, the island`s largest lender, is wound down with its assets and insured deposits absorbed by Bank of Cyprus, which is currently under a consolidation procedure. The bailout was coupled with strict capital controls which economists say hamper economic activity.
The Troika mission is in Cyprus since July 17 to assess the implementation of a Memorandum of Agreement, the basis of the international rescue programme. It departs from the island at the end of July.
