Parliament green lights €100m for 'haircut' depositors and bondholders

The budget of the National Solidarity Fund for the year 2025, which amounts to €100,005,010, was unanimously approved by the Plenary of the House of Representatives.

This amount will be used for the implementation of the Partial Replenishment Plan, which concerns persons affected by the 'haircut' resolution measures implemented in the two systemic banking institutions in 2013.

For each beneficiary, the replacement amount was calculated based on the uninsured impairment amount, with a maximum limit of €1,000,000 per category and a maximum total amount of €100,000 per individual. The compensations concern haircut depositors and holders of securities.

Speaking in the plenary session, Nicosia MP Alexandra Attalides described the 2013 haircut as the greatest economic injustice ever committed in the country and stressed the need to prioritise compensation for vulnerable citizens, such as quadriplegics, the elderly and orphans. She expressed the view that the horizontal approach to the payment of compensation is wrong and leads to new injustices, calling on the state to prioritise humanitarian criteria.

Democratic Alignment (DIPA) MP Alekos Tryfonides welcomed the submission of the budget and the start of the payment of part of the compensation, emphasizing that DIPA-Cooperation had repeatedly requested the start of the procedure. He expressed satisfaction with the intention to reopen the electronic platform and requested information on the progress of replenishment to the old shareholders of Laiki Bank and the provident funds. He also emphasised the need to cover the legal costs of those affected who went to court and lost their cases.

The President of the Cyprus Greens-Citizens' Cooperation, Stavros Papadouris, expressed satisfaction with the progress of the partial repayment process and the imminent reopening of the platform for those who did not have time to submit an application. He pointed out, however, that there are groups that are being wronged and are not covered by the plan, as was also mentioned in a relevant letter received by the Cyprus Greens. He stressed the need for no beneficiary to be left out, provided that the state has the capacity to respond.

EDEK MP Marinos Sizopoulos referred to the securities that were then absorbed by the two banks, which had been made available to citizens with misinformation and without complying with the instructions of the Cyprus Securities and Exchange Commission.

He stated that the Laiki Bank was nationalised at that time and the state is responsible for compensation, while he called on the state to exert political pressure so that the Bank of Cyprus also assumes its own responsibilities. He recalled that he had proposed an alternative solution to the haircut, by borrowing through ten-year government bonds, a proposal that was not accepted. He also referred to a scandal of money movement during the closed period of the banks and asked for the results of the investigation to be announced.

AKEL MP Andros Kyprianou, who chaired the Plenary, referred to the multiple proposals that had been put forward in 2013, saying that some wanted to turn Cyprus into a guinea pig and this experiment failed miserably. He expressed disappointment over the fact that, despite the delivery of a comprehensive list of cases of money transfers during the closed banking period, the Legal Service has done nothing to date.

ELAM MP Sotiris Ioannou welcomed the decision to partially compensate the victims of those decisions, noting that the credibility of the state is judged by the way it manages the wounds of the past. He considered it particularly positive that the electronic platform was re-opened and pointed out that no one who had a haircut should be left out of compensation due to bureaucratic problems or errors. He stressed that provident funds are not anonymous accounts, but represent the work of thousands of employees, who must be treated with particular care and calculation per employee and not as a single unit.

AKEL MP Andreas Kafkalias noted that the Fund is attempting to compensate those who were had their deposits cut, but this is only a part of those who suffered losses from the 2013 haircut. He referred to the loss of income, the reduction of wages, the destruction of small and medium-sized enterprises and, above all, the losses of the provident funds, which – as he said – are not included in the Plan. He criticised the Government for the lack of intention to fully restore the employees’ provident funds and noted that there are no regulations that determine who is compensated, in what ways and for what amounts.

DISY MP Savia Orphanidou stressed that the collapse of the banking system and the economy was the result of serious mistakes, procrastination and irresponsibility of the past. She pointed out that the recovery of the economy through correct policies and the sacrifices of the people allows today the partial restoration of the losses. She recalled that the Fund was created by DISY legislation in 2017 and has been strengthened with €260 million to date. She mentioned that the Government left out the old shareholders, an issue that DISY has repeatedly highlighted and expects them to be included in the next plans, so that they have access to the electronic platform.

DIKO MP Christiana Erotokritou said that she does not accept criticism from DISY for those who are not covered today, since the activation of the Fund was delayed while the economy was doing well under their own governance. She stressed that the current Government is bringing about the Fund's first budget and DIKO welcomes the provision for bondholders, as well as the reopening of the electronic platform.

She also noted the speed with which the Finance Committee examined this budget. She also pointed out that Cyprus suffered unique and harsh treatment and should seek compensation from its European partners. She pledged that her party will support similar Solidarity Fund budgets in the coming years, within the state's capabilities.

AKEL MP Aristos Damianou recalled that the haircut was carried out during the ten-year rule of Nicos Anastasiades, who had stated that “they put a gun to his head.” He reported that the Parliament had approved a unanimous conclusion that reflected the responsibilities of the banks and the Central Bank and the criminal responsibilities of bankers, while the Institutions Committee had delivered data to the Legal Service, without anyone being punished. He complained that while today some are being compensated due to economic growth and the sacrifices of citizens, impunity for those who exploited the crisis remains.

DISY MP Onoufrios Koullas referred to the findings of an investigative committee that assigns responsibilities sequentially for the crisis, meaningfully noting that he knows who is first but does not wish to mention it. He hoped that the bureaucratic problems would be overcome and that payments would be made soon, while he underlined the pending issues, such as the need to restart the platform and the inclusion of old shareholders.

He expressed disappointment over the fact that some properties were not transferred to the Fund. He recalled that the joint legislation passed in 2019 was the result of cooperation between DIKO-DISY-the Solidarity Movement, while AKEL had opposed the compensation of those affected at the time. He emphasised that the Fund's budget was not activated immediately due to the pandemic that followed, although, as he said, even in the midst of a pandemic, the state continued to finance the Fund.

(Source: InBusinessNews)