Probe demanded into why Demetriades withheld information that could have averted bail-in

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By Stelios Orphanides

DIKO chairman Nicholas Papadopoulos said that authorities should investigate why the Central Bank of Cyprus withheld information from the government which could have averted the bail-in of depositors in March 2013.

Papadopoulos, who was commenting in a telephone interview, said that both former Central Bank of Cyprus governor Panicos Demetriades as well as other officials who had direct knowledge of reservations expressed by a BlackRock official in an email-exchange with them in January 2013, about the capital requirements of the Cypriot banks, should be the subjects of a probe.

The central bank hired BlackRock in early 2012, to verify the conclusions of an exercise carried out by PIMCO on the capital requirements of Cypriot banks. PIMCO, which the central bank hired in September of the year 2012, said that Cypriot banks needed a total of €9bn in fresh capital.

“I don’t understand why they are protecting Demetriades or the officials who kept reforms secret,” Papadopoulos said. He added that the suspected that the reason no behind the lack of an inquiry has to do because authorities “are backing Demetriades and the central bank’s officials”.

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About Author

Stelios Orphanides is a journalist at CyprusBusinessMail.com. To contact Stelios Orphanides: [email protected]

  • Attila

    Since Panicos Demetriades has fled to the UK, complete with his ill gotten gains (including totally undeserved compensation – removed against exchange control rules then in force), I would suggest handing the complete dossier to the UK Serious Fraud Office, and asking them, in the spirit of EU cooperation to interrogate, investigate, charge, find guilty, lock up, and throw away the key, and repatriate his proceeds of crime back to the BoC for disbursement to the robbed

    • Blighty Almighty

      Are you a Turk?

      • Terryw45

        Are you related to the Sphincter family ?

        • Disgraced Gothamboy

          You do him an honour, I think he merely spent a brief time with one of them before leaving abruptly.

    • Spanner Works

      The UK’s SFO are totally useless, most of their investigations go on for years and very rarely result in a prosecution.

  • comments-on-mail

    Planet Earth is calling, you are kindly requested to realise that banks needed further capital and finally concede that PIMCO did not inflate the capital shortfall and therefore Blackrock’s reservations were invalid. This joke is getting old. Even the “fire sale of the Greek operations” seems better than this one. Oh by the way you may wish to receive the residual value of the Greek operations. The total bill is 12,5 billion for the recapitalisation of the Greek Banks. Do the maths and proceed accordingly.

    • Disgraced Gothamboy

      Hello Planet Earth, the market price of everything depends on when you buy it and when you sell it, the value changes, prices can go up or down as we are always told. At one time people who had shares in BOC worth €1,000,000 and held onto them ended up with shares worth less than €100, those with shares in Laiki got nothing – small difference. Wilbur Ross is no idiot and he will lose a fortune in Greece, he couldn’t see that the massive flight of capital would be allowed, and it is the flight of capital that has destroyed the Greek Banks, Alpha Bank passed the stress test and the other 3 Banks had measures under way to pass them – that was late last year.

      In retrospect the money the Cyprus Banks got for their Greek operations is a 100% more than they would have got by holding on to them but it does not mean the value was not more than what they got when they sold them.

      • comments-on-mail

        Do you suggest that the distressed assets of the Cypriot banks in Greece, which is suffering from a constant political instability since 2009 (with small breaks) were valuable back in 2013? Since you refer to the Stress Test, I suppose that you have noticed that the provisions of the Piraeus Bank were adjusted by 2,7 billion (following to the acquisition of our diamonds), as per the results of the AQR before they run the stress test, even though it had a conservative provisioning policy during the previous periods. In my view the recognition of negative goodwill, was a regulatory failure of the Bank of Greece that was corrected by the ECB during the AQR.

        With respect to your reference to the problems of the Greek banking system in general, the Greek banks were not robust well before the recent events. A banking system in a bankrupted country where DTAs were equivalent to more than 40% of CET1 that later on were renamed into DTCs so that they do not rely on future profitability and bypass the provisions of the CRR, it does not qualify to be called robust. If you take into consideration that the EC is allegently investigating whether DTCs could be considered a hidden State aid, it might does not qualify to be called solvent either.

        Whoever believes that the Greek operations were valuable, in my view is a victim of the those ignorants who transformed ELA into a curse, BlackRock into a financial wizard that even reality is beneath it and so on.

  • This is all rather academic. Schäuble, Dijsselbloem and Rehn had already decided to bail in the Cyprus banks, regardless of their capital requirements. German elections were about to be held in September 2013.

  • Mist

    Ego, he could not admit he got it wrong. This would have destroyed his creditably as an author. I note most of his articles are with another person, not solo.

  • Cherry

    “I don’t understand why they are protecting Demetriades or the officials who kept reforms secret,” Papadopoulos said.I don’t understand why they are not investigating the Papadopoulos family for the Milosovic billions that were laundered through Cyprus

    • No_Name12

      They were, but when Tasos got into power the investigations suddenly stopped. Coincidence of course.