Tags: Cyprus | bank | failure | EU

Euro Zone Clamour Drowned out Cypriot Bank Warnings =2

Friday, 22 Mar 2013 11:31 AM

any lapses and said he had encouraged the banks to offload their Greek positions.

"It was very sad, he accused me of undermining him," said Papageorgiou, who left the central bank board when he was elected to parliament in 2011 for the then-ruling AKEL party, which lost power to the right wing Democratic Rally party in February 24 elections.

Orphanides also clashed with leaders of the AKEL government. Apostolides says the central bank governor had told Cyprus' president that the banks could survive a maximum 25 percent loss on their Greek bonds.

The "haircut" ultimately agreed by European leaders, including Cyprus' president Demetris Christofias, was more than 70 percent, heaping losses of 4.5 billion euros on the banks.

When Orphanides' five year contract expired in May 2012, it was not renewed. He had criticised government spending and Cyprus' growing indebtedness for years, culminating in an especially sharp report in his last week in office.

Christofias hit back by using a trade union rally to criticize the governor's role: "Mr. Orphanides' responsibilities for the Cypriot banks' exposure to Greek bonds is overwhelming," the president said.

Last year, the central bank board appointed consultants Alvarez and Marsal to carry out an investigation into what really went wrong in the banking sector. It is expected to be completed in April.

Olympios says he knows of several investors - both institutional and individual - who will use the results of the report as a springboard for legal action to take cases for mismanagement against the bank's then-directors.

One, who lost millions on his shares in Bank of Cyprus and Laiki, is already working with lawyers on a case.

"Cyprus is a small country and we are all friends but I am going to go against them," said the investor, who asked not to be named. "I was an outside observer, they told me everything was all right." (Additional reporting by Michele Kambas; editing by Alexander Smith and Philippa Fletcher)

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any lapses and said he had encouraged the banks to offload their Greek positions. It was very sad, he accused me of undermining him, said Papageorgiou, who left the central bank board when he was elected to parliament in 2011 for the then-ruling AKEL party, which lost...
Cyprus,bank,failure,EU
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2013-31-22
Friday, 22 Mar 2013 11:31 AM
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