One Investor's Nightmare In Popular Bank Fallout
On July 2nd, The Cyprus Popular Bank (CPB) was bailed out by the government, which now owns 85 percent of the lender, but the rescue came too late for one man who now faces losing investments he intended to use to send his four children to university.
Dr. George Georgiou lives in Larnaca, and last week, received a call from his bank manager asking him to come as soon as possible.
"I drove there early morning only to be confronted with a morbid atmosphere as if someone important had died," writes Dr. Georgiou in his blog.
The manager told him that the interest on his sizeable bond investment would be stopped on instructions from the Central Bank. He is also not allowed to access the capital in the account, which is collateral for a loan that he had taken out six months ago. But the bank manager insisted that he would have to continue to pay his loan, despite having just refused to give him access to his own investment.
The bond was "a sizable sum which amounted to over 25 years of hard work here in Cyprus," says Dr. George.
The figures are intimidating. Cypriot banks have outstanding loans totalling 152 billion euros, and the CPB invested 3.4 billion euros in Greek bonds which it had to write down by 50%. But what it all boils down to is that ordinary investors in Cyprus could lose their own bond assets after decades of hard work, just like Dr. George.
CPB is now in the process of informing all its investors of the same thing, some of which are pensioners, others of which are big businesses which have invested their employees' pension funds, says Dr. George.
The whole story smacks of unethical practices and covering up of mistakes, he says.
"No one takes responsibility - you are a number and they are "the system" that you have to obey or else..." he says.
The case is likely to end up in a lawsuit, and Dr. George appeals to other investors to protect their wealth: "do not trust any bank or institution to keep your money as you are likely to lose it," he says.
Dr. George withdrew his own cash funds from CPB some months ago, fearing that something like this might happen.
And it did.
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