Bank of Cyprus must exit resolution quickly, says Dijsselbloem

Bank of Cyprus Pcl needs to be “brought out of resolution as quickly as possible,” Dutch Finance Minister Jeroen Dijsselbloem said in a letter sent late Tuesday to Cypriot President Nicos Anastasiades.

“The situation in Cyprus is indeed such that it allows neither complacency nor delay in addressing the pressing issues in the financial sector,” Dijsselbloem said in the letter obtained by Bloomberg News. “Cypriot businesses’ unencumbered access to their working capital must be restored.”

In a letter to European Commission President Jose Barroso dated June 6, Anastasiades said that a financial rescue package from the euro area and the International Monetary Fund imposed losses on bank depositors “without careful preparation,” creating “pressing issues that need to be addressed.” A significant number of Cypriot firms have lost their working capital, he said.

In his reply as head of the group of euro-area finance ministers, Dijsselbloem reiterated the currency bloc’s commitment “to stand by Cyprus in partnership and to support its return to a stable and prospering economic path.”

Dijjselbloem said the Cypriot government should “avoid speculation” about its commitment to the terms of its bailout.

“The public assurances of your government that Cyprus is fully committed to applying the terms of the financial assistance program have been helpful,” Dijsselbloem said. “Clear and coordinated communication to your public regarding the banking sector strategy included in the program is especially important to anchor confidence at this critical juncture.”