Cyprus and its international lenders have agreed to convert 47.5% of deposits exceeding 100,000 euros in Bank of Cyprus to equity to recapitalize the bank.
Deputy Government Spokesman Victoras Papadopoulos said on Monday that the Central Bank of Cyprus (CBC) has, as the competent Consolidation Authority, reached a definite percentage of the bail-in, at 47.5%.
He noted that the government, taking into consideration studies of independent specialized agencies, considers that the necessary capital efficiency could be reached with a lower percentage as well.
Papadopoulos said the government submitted concrete proposals during negotiations held on Sunday towards this direction.
He also said that the strict implementation of the Memorandum of Understanding Cyprus has agreed with its international lenders constitutes the only quick way to exit the crisis, and referred to a “hopeful stabilization of the situation” of the economy.
In statements after a meeting of the National Economy Council, under President Nicos Anastasiades, Papadopoulos said the Council looked into the course of the implementation of the Memorandum and current developments in the economy and the banking system, in view of developments regarding Troika’s assessment.
He said the Council submitted proposals and views to the President and the government which will soon be handed over to the political parties.
“During today’s meeting, participants noted that there is a hopeful stabilization of the situation which will give an impetus to the economy to get back on track to exit the crisis,” he added.
Furthermore he said they agreed that “the strict implementation of the Memorandum is the only quick way for exiting the crisis.”
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.
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.
