ECONOMY

Sarris says first Eurogroup deal a ‘success,’ would have prevented Laiki closure

Cyprus Finance Minister Michalis Sarris has distanced himself from the terms of Cyprus’s bailout agreement, saying that the decision reached at the March 15 Eurogroup for a levy on depositors above and below 100,000 euros would have been a “success”.

Speaking to Cypriot state broadcaster RIK, Sarris said that he preferred the option of taxing deposits under 100,000 euros at a rate of 6.75 percent and imposing a levy off 9.99 percent on savings above 100,000.

This option was rejected by Cypriot Parliament, leading to an agreement early Monday for the winding down of Cyprus Popular Bank (Laiki) and the restructuring of Bank of Cyprus.

“The first Eurogroup agreement was a great success,” said Sarris. He added that it would have prevented Laiki bank being shut down.

Sarris, who was previously chairman at Laiki, said that the bank’s problems started in 2007. “It fell into the hands of people who loaned huge, uncontrolled amounts, mainly in Greece,” said Sarris.

In 2006, Marfin Investment Group from Greece, led by businessman Andreas Vgenopoulos, launched the takeover of Laiki, which was merged with Marfin and Egnatia banks.

The Cypriot state acquired and 84 percent stake in Laiki last year after recapitalizing the troubled lender.

Sarris said the bank had been placed on “life support” for the last two years in anticipation of Cyprus agreeing a rescue package with the troika.

In his interview, the finance minister also refused to rule out cuts to wages and pensions in Cyprus.