Disy MP Averof Neophytou on Tuesday called on other parties to quickly adopt and pass through the legislature a proposal affording partial restitution to those who saw their bank savings wiped out in the March 2013 haircut.
Neophytou released a statement on the occasion of April 30 the last day that beneficiaries of the Solidarity Fund can apply for partial restitution from the fund. This includes both individuals and corporate entities.
The funds beneficiaries are the biggest victims of the 2013 financial crisis, and a fair state owes them at least partial restitution for the damages they suffered, the former Disy leader said in his statement.
He went on to explain what his legislative proposal entails. Neophytou recalled that the total amount in deposits that suffered a haircut any savings over and above €100,000 were seized comes to approximately €1 billion. This applies to Cypriot individuals.
In addition, the total value of the bonds whose value was decimated comes to €1.1 billion. But excluding professional investors and taking into account the value of the bonds at the end of 2012, the total amount of damages sustained by Cypriot individuals tallies at €2.2 billion.
To date, Neophytou went on, the Solidarity Fund has cash reserves of about €200 million. It also holds immovable property assigned to it by the state of a value of €75 million.
According to his calculations of the cash reserves in the fund, each beneficiary could immediately receive €8,000 for every €100,000 lost in the haircut.
His legislative proposal has to do with how the moneys would be disbursed. Up until now, the relevant law holds that once €175 million accumulates in the bank recapitalisation fund, all those funds remain with the state treasury.
Under Neophytous proposed amendment to the law, once the €175 million accumulates, €60 million of that would be channeled to the Solidarity Fund. This would account for the €8,000 immediately payable to beneficiaries.The MP stressed that these payouts would not fully dispense social justice, but it is a good start, a minimum gesture that this state recognises the sacrifices of those suffering a haircut the depositors and bondholders.
In March 2019 parliament enacted the Solidarity Fund, aimed to provide relief to legacy Laiki depositors and bank bondholders whose investments were wiped out in the 2013 bail-in.
The Solidarity Fund was initially allocated €55m in start-up funds, with the government promising to finance it from state grants and proceeds from the use of state property.
The events of March 2013 saw the loss of €7.7bn in deposits (amounts over €100,000). In addition, anywhere from €1.2bn to €1.5bn in contingent securities were converted into equity (bank shares) of practically zero worth.
The total amount in compensation claims by bondholders in court cases comes to an estimated €400m.
The government has made it clear that the assistance to be given to the victims of the 2013 haircut is not ‘compensation’, as that might suggest the state was legally liable for the bail-in.
The government has acknowledged that only a fraction of the bail-in losses would be covered.
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