Cyprus Seeks €4 Billion in Damages from Greece for Laiki Bank



Defunct Cypriot bank Marfin Popular has resorted to the International Center for Settlement of Investment Disputes (ICSID) to seek damages of more than 4 billion euros from Greece over losses from the PSI debt restructuring in 2012.

The story appeared on Thursday in Cypriot newspaper Politis and included a political angle given that the bank, commonly known by its previous name, Laiki Bank, is state-controlled. According to a Kathimerini report, the chances of the bank winning the case are very slim due to the res judicata in a case brought by a Slovakian bank to the ICSID.

Laiki’s claim is based on an interstate agreement between Greece and Cyprus that concerns the mutual protection of investments. That protection did not apply in 2012 in the case of the Greek state bonds held by Laiki, which suffered a haircut and took significant losses that contributed to its eventual downfall, Kathimerini says.

The fact that the defunct bank’s depositors lost a major share of their money because of the haircut imposed as part of Cyprus’ bailout, has led the Cypriot government to act against Greece mainly using a political criterion and not a financial one.

At the same time, 676 Greek depositors are demanding that the Cypriot government cover their losses resulting from the haircut on Cypriot bank accounts. The Greek depositors had accounts at Laiki Bank and Bank of Cyprus. The claim has been lodged at the same court, the ICSID, and claimants include private depositors, institutional investors and bondholders.


2 COMMENTS

  1. Waste of time and money..Move on…and create wealth for your shareholders and depositors…

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