Defunct Laiki Bank unsecured depositors who suffered a haircut are to receive a pittance as compensation for losing savings above the €100,000 guarantee when Cyprus’ banking system imploded in 2013.
Unsecured depositors are to receive an estimated 5 to 6 cent compensation for every euro they lost in the bail-in.
Administrators told MPs that income from the winding up Laiki’s assets has reached €192 mln, while depositors had lost a total of €4 bln.
Commenting on the fact that depositors will only receive 5 to 6 cent compensation for every euro lost, Adonis Papaconstantinou, head of the Laiki Bank Depositors Association (Sykala), said that Laiki customers were being “burnt” for a second time.
He said the outcome was no surprise, as the only ones who profited by the manner in which assets were administrated were a handful of lawyers, accountants and consultants.
According to report present by the administrators before the House Committee on Institutions, ex-Laiki also owns a capital share of 4.8% in Bank of Cyprus with a current value of €34 mln.
"If one is to do the math, then they will find that affected depositors will actually get 5 to 6 cents for every euro, which is not satisfactory at all," said MP Zacharias Zachariou, chairman of the committee, adding that the delay in asset management resulted in a decline in asset values.
As added: "If one looks at the time a winding up procedure usually takes, they will see that procedures take a maximum of two years and we are already in the sixth. When you have to sell overseas assets whose parent company is bankrupt, the value of those assets is sure to decrease."
Speaking before the committee, Cyprus Central Bank Governor Constantinos Herodotou said the CBC wants to see the process come to an end as soon as possible.
He Recalled that assets had initially been valued at €663 mln in March 2013, with the former Laiki Bank of Cyprus share being valued at €382 mln in the same period.
Herodotou said that the administrator had sold 50% of the former Laiki shareholding pulling in some €65 mln, while the remaining 50% was valued at €34 mln.
"Therefore, €283 mln was lost due to the fluctuation of Bank of Cyprus’ shares," he said.
According to data provided by Kleovoulos Alexandrou, the administrator of former Laiki’s assets, some €19 mln was paid out to law firms.
Green MP George Perdikis commented that depositors can expect to “receive peanuts in compensation for their losses”.
