ECONOMY

Cypriot lender probe will cover Laiki

Cyprus’s central bank confirmed on Monday it will extend an inquiry into the banking crisis that has crippled the island to fully cover Cyprus Popular Bank (known as Laiki), nationalized last year because of heavy losses from Greece.

A central bank-commissioned probe leaked last week made reference to the lender’s purchase of Greek government bonds, while focusing on the island’s largest commercial bank, Bank of Cyprus.

Central Bank of Cyprus Governor Panicos Demetriades told lawmakers on Monday the inquiry would move on to Laiki and its Greek bond buys.

“It is expected to be completed in the next few months,” Demetriades said.

Cyprus agreed a 10-billion-euro bailout deal from the European Union and International Monetary Fund designed to untwine it from a banking sector that has all but crumbled in the past month.

In stark contrast to previous eurozone bailouts, depositors with more than 100,000 euros in Cyprus are being forced to pay to recapitalize their banks, badly hit by their exposure to Greece.

Despite the onerous terms, Cyprus had no other option and any discussion of leaving the eurozone was out of the question, Finance Minister Harris Georgiades said at the same meeting of lawmakers.

“I would like to make this clear: There is no Plan B… An exit from the euro, and I underline this, would equal a much bigger haircut not only on big depositors but on the entire economy,” he said.

“The living standards of every citizen would go back decades.”

Demetriades, speaking to the financial affairs committee of the Parliament in Nicosia, said he had sent to another committee, the ethics committee, a list of major transfers.

That list is due to be discussed today.

“It details outflows from the two banks, of over 100,000 euros,” Demetriades said.

[Reuters]