Central Bank of Cyprus (CBC) has filed an application to the Nicosia District Court for the liquidation of former Laiki Bank, eight years after it was sacrificed in the 2013 bailout to save the economy.
CBC Governor Constantinos Herodotou told the House Finance Committee on Monday that the Central Bank submitted the request to the court on 8 January and when the liquidation process begins depends on the judge.
He said completion of the sale of Laiki subsidiaries in Greece in July 2019, opened the road for the liquidation of what was once the island’s second-largest bank.
Herodotou said available assets of former Laiki amounted to €232 mln at the end of September 2020, including €140 mln received from sales of Laiki assets so far, compared to the €663 mln valuation by KMPG in 2013.
However, he added that the bank’s assets in 2013 were estimated at €800 mln, according to another valuation made on behalf of the Association of Laiki Depositors (SYKALA).
Heredotou said the mandate of former’s Laiki Resolution Authority was to retrieve as much as possible for depositors from the liquidation.
Explaining the next steps, the Governor said the Court should examine the application and accept CBC’s proposal of the liquidator for the process to begin.
Responding to criticism over inexplicably long-delays, he said that although he understands the frustration of creditors of Laiki, the process of selling the subsidiaries in Malta, Greece, Serbia, Russia and Ukraine was complex and time-consuming.
Supervisory approvals had to be given while in Malta and Greece there were also requests for arbitration.
Laiki was taken into administration and wound down under terms of a €10 bln international financial assistance package to Cyprus in March 2013.
Some €4.3 bln in uninsured deposits exceeding the EU threshold of €100,000 were wiped out.
Laiki’s former creditors (depositors and bondholders) have roasted authorities, claiming the delay in offloading assets has resulted in diminishing returns in what they can expect to recover.