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Bank of Cyprus fully repays emergency liquidity assistance debt

Xinhua, January 6, 2017 Adjust font size:

Bank of Cyprus, the biggest Cypriot lender, has fully repaid its Emergency Liquidity Assistance (ELA) to the Central Bank of Cyprus, Chief Executive Officer John Hourican said on Thursday.

"This should further strengthen stakeholders' confidence that the bank is becoming a stronger, safer and a more focused institution capable of delivering appropriate shareholder returns over the medium term," Hourican said in a statement.

A few hours later the bank announced that its shares will commence trading on the London Stock Exchange on January 19.

Bank of Cyprus inherited an 11.4-billion-euro(12.08 billion U.S. dollars) ELA debt from the now defunct Cyprus Popular Bank with which it was forced to merge under the terms of a 10-billion-euro bailout of Cyprus by the Eurogroup and the International Monetary Fund in March, 2013.

Former Central Bank governor Panikos Demetriades has told a parliamentary investigation that Cyprus Popular Bank was allowed to continue drawing billions of euros in ELA in the days ahead of the bailout though it was bankrupt, on the behest of the former government which did not want the bank to collapse and compromise its reelection prospects.

Bank of Cyprus was also forced to recapitalize by turning almost one-half of large deposits over 100,000 euros into stock as part of the bailout conditions.

"The full repayment of ELA funding has been a strategic objective of the bank over the past three years and signifies the normalization of the bank's funding structure," Hourican said in his statement.

News of the ELA repayment led to an increase of the bank's shares at the Cyprus stock exchange by 6.1 percent, reaching 0.157 euros.

Cypriot Finance Minister Harris Georgiades issued a statement congratulating Hourigan on the repayment of the ELA debt.

He said that "it is an important development that confirms the consolidation of the bank and the restoration of confidence in our country's banking system."

Sources said that following the repayment of ELA, Bank of Cyprus will be free to start paying dividend to its shareholders. Most of them are its former depositors who became its owners. Endit