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Arbitration court in Stockholm rejects action against Cyprus for 2013 impairment of bank deposits

Xinhua, February 23, 2017 Adjust font size:

An arbitration court based in Stockholm has rejected an action by two Polish investors against the impairment of their deposits by Bank of Cyprus to recapitalize as part of Cyprus' bailout in 2013, Attorney General Costas Clerides said on Wednesday.

He told the state television that the decision was unanimously adopted by the Arbitration Court established under the Arbitration Rules of the Chamber of Commerce of Stockholm in a case related to the resolution of Bank of Cyprus.

Applying a decision by the Eurogroup on March 25, 2015, as part of a 10 billion-euro bailout, Bank of Cyprus converted 47.5 percent of uninsured deposits over 100,000 into bank stock to bring its capital up to a level required by European Central Bank.

The applicants had complained that the impairment of their deposits contravened the Bilateral Investment Protection Agreement between Poland and Cyprus as it amounted to an unlawful expropriation of the property rights.

Clerides said the decision by the Stockholm Arbitration Court is an important tool for Cyprus to use in other similar applications pending before the International Arbitration Court based in Paris and a barrier to possible other similar actions by impaired depositors.

There are three cases pending before the Paris Court, the most important one being an application by Andreas Vgenopulos, the former CEO of Cyprus Popular Bank, commonly known as Laiki, which was wound down and folded in Bank of Cyprus by decision of the Eurogroup.

Vgenopoulos, who died a few months ago, had demanded over 1 billion euros, claiming that Laiki was destroyed by illegal acts of agents of the Cypriot state.

Vgenopoulos and several of his associates on the Laiki Board are accused in several cases initiated by Cyprus's Attorney General of causing the bankruptcy of the lender by illegally funneling huge loans to friends and associates in Greece without following bank rules and without adequate guarantees. Endit