By George Psyllides
FORMER president Demetris Christofias on Thursday denied blame in the collapse of Laiki Bank, which brought Cyprus to the brink of collapse.
Christofias was commenting on a report published by the New York Times on Wednesday.
The leaked report had been commissioned by the Presidental Palace but the author or authors have not been disclosed.
The report said Christofias’ government avoided resorting to the European Financial Stability Fund and found an assistant in keeping the bank in operation, Athanasios Orphanides, governor of the Central Bank of Cyprus at the time.
Orphanides, who already knew the bank was insolvent and was hence barred from receiving any liquidity, was the only person who could have stopped the plan, according to the report.
“Since November 2011, the CBC knew that providing liquidity to an insolvent institution was a breach of Article 123 of the EU Treaty and Article 121 of the Statute of the European System of Central Banks,” the report said. The CBC also knew, from the opinion expressed by the ECB, that the Management of Financial Crises Law was in breach of the aforementioned Treaties. However, the CBC had given its consent to its enactment by the House of Representatives on December 30, 2011.”
The finance ministry prepared a bill allowing the government to take over a failing bank on October 25, the eve of Greece’s haircut, as the restructuring is also known. It added that the cabinet approved the draft legislation on the same day.
Christofias, Kikis Kazamias, the finance minister at the time, and the governor of the CBC, were all aware of the impact the haircut would have on Laiki’s capital.
Christofias said the government had not been informed of any “catastrophic” results because of the write-down. They expected that Bank of Cyprus would cover its needs, while Laiki would need some €1.5bn in state support, which could have been covered by issuing bonds.
The former president said ELA was the responsibility of the CBC and parliament had been informed that Laiki had drawn some €9bn by the time it was nationalised in June 2012.
Laiki’s support was welcomed with celebrations from the opposition, Christofias said.
“Everyone said that Laiki should not close because it would take Bank of Cyprus and our entire banking system with it,” he said.
Regarding the seizure of deposits, which took place in March 2013 – some 15 days after Nicos Anastasiades came to power — Christofias said no one had ever hinted anything to him.
However, ruling AKEL chairman Andros Kyprianou had said on February 8 that Cyprus was being pressured by international lenders for depositors to contribute.
