Greek investors who say they were discriminated against and lost millions in a bail-in of Cypriot bank deposits in 2013 have launched legal action against Cyprus at an international arbitration court, their lawyers said.
Some 676 individual and institutional depositors and bondholders, asserting 434 separate claims, are seeking to recover losses they estimate at over 120 million euros ($135 million).
Cyprus imposed losses on unsecured deposits in Bank of Cyprus and now-defunct Laiki Bank in 2013, when the island formally requested a 10-billion-euro bailout from the European Union and International Monetary Fund.
Both banks had hundreds of millions in exposure to Greek sovereign bonds, written down in an EU-sanctioned attempt to make the Greek debt mountain more manageable.
The write-down inflicted losses on Cypriot banks, which held a lot of Greek government debt. The bail-in rule kicked in when the IMF and the EU refused to put up enough funds to cover the recapitalisation of Cypriot banks.
"We believe that Greek investors were singled out and discriminated against during the bailout – while Greek depositors were subject to extreme bailout measures, many public institutions of Cyprus were made exempt," said Jay Eisenhofer, co-managing director of law firm Grant & Eisenhofer in an emailed statement.
The Cypriot finance ministry was not immediately available for comment.
Cyprus, a eurozone member since 2008, was first to enforce the 'bail-in' rule, now an EU directive, requiring that under certain circumstances bank depositors would shoulder the cost of recapitalising banks.
The case has been filed with the International Centre for Settlement of Investment Disputes, an international investor tribunal affiliated with the World Bank.
The dispute will be adjudicated through binding arbitration, a statement from attorneys representing the investors said. [Reuters]