ECONOMY

Dijsselbloem blames Cypriot banks for exposure to Greece

Eurogroup chief Jeroen Dijsselbloem told a European Parliament committee on Tuesday that Cyprus has secured the best possible international bailout “so that the Cypriot debt would remain sustainable while European taxpayers would not be burdened” due to the investment risks that the two largest Cypriot banks had taken.

Facing a rather hostile audience at the European Parliament’s Economic and Monetary Affairs Committee, the Dutch finance minister said that “under the very unfortunate circumstances, this was the best way to address the problem,” but acknowledged that “the trust in banks has been damaged” by developments concerning Cyprus.

He went on to assert that the eurozone’s top priority was the sustainability of the Cypriot debt: If it was to burden the state, Nicosia would never be able to pay it, while the choice made will allow the country to recover, he said.

The decision was delayed, Dijsselbloem claimed, due to the branches of Cypriot banks in Greece, where discussions took some time “because we had to make sure that everything would be ready to save those branches.”

He also blamed Bank of Cyprus and Popular Bank (Laiki) for their huge exposure to Greek bonds and loans.

“It was a risk they took and they have faced the consequences,” said Dijsselbloem.