Cyprus to probe bank’s Russian acquisition

Cyprus’s most senior legal official will investigate the circumstances of troubled lender Bank of Cyprus’s acquisition of a small Russian bank in 2008, authorities said on Tuesday.

Bank of Cyprus was one of two systemic Cypriot banks taken over by the state under an international bailout agreed for Cyprus in March that also raided customers’ deposits to pay for recapitalization.

Cypriot President Nicos Anastasiades has asked the island’s attorney general to investigate the circumstances of Bank of Cyprus’s purchase of Uniastrum Bank, a government spokesman said.

The probe is one of several under way by Cyprus, left reeling by a chaotic financial meltdown which has sent the Mediterranean island hurtling into recession and forced thousands to give up part of their savings.

A Central Bank-commissioned investigation made public in April found the bank went ahead with the purchase despite misgivings in due diligence reports and a legal opinion that judged it could withdraw from the deal or renegotiate the acquisition price.

The report would be assessed by the attorney general, deputy government spokesman Victoras Papadopoulos said in a statement. The same probe said it found no evidence of corruption. [Reuters]