Investors Line Up to Sue Banks
Dozens of angry investors are lining up to sue Cyprus Popular Bank (CPB) and Bank of Cyprus (BoC) for misleading them about capital securities that were supposed to yield 7 percent interest, as first reported by CyprusNewsReport.com earlier this month.
Many of the investors are complaining that they were misled and that the products they were buying were not explained clearly to them. Christos Clerides' law firm alone is preparing more than 80 lawsuits against CPB, which is now owned by the state.
The Cyprus Securities and Exchange Commission (CySEC) said that the banks had published the risks as required by the law, including the risk that the bank may not pay interest if it has insufficient capital. However, CySEC chairwoman Demetra Kalogirou pointed out that there is still a question about who actually advised bank customers about the products. If it was a bank employee instead of licensed investment advisers with the necessary certificates, then this is a problem, according to the official. The bank was also obliged to profile and categorise each investor based on their investment experience.
According to one investor interviewed on state radio yesterday, it was her first investment and she was assured that the securities she was buying were completely safe. The bank employee who talked her into buying the product said that she had bought some for herself, and bought some for her daughter and parents as well. Another investor went on public record to say that he had no idea that when he invested his savings in such securities that his money was being invested in the Cyprus Stock Exchange.
Meanwhile, Bank of Cyprus is being investigated by the Capital Markets Committee for stating that it needed 200 million euros in state support, and then changing its story a few days later and asking for 500 million instead.
The banks are waiting anxiously for a multi-billion-euro bailout from the Troika, but the IMF has just postponed its trip back to Cyprus until July 22nd, when negotiations are due to start with the government on the terms and conditions of the rescue package. Speculation that the delay is because the Troika is upset at President Demetris Christofias' bargaining tactics were denied by the government spokesman. Last week, Christofias went on public record in Brussels to say that Russia's loans would be better than the EC/ECB/IMF rescue package because they would not have any conditions attached to them.
A reported five billion-euro loan from the Russian Federation has not been secured, said the government spokesman.
According to IMF Director of External Relations Gerry Rice, the IMF is still studying initial data gathered by its experts, and although a timetable for the team's return has not been set, it will be in the next couple of weeks.
Rice also commented on the prospect of Cyprus borrowing from Russia, saying: "this is really a matter for the authorities and bilateral lenders to discuss and decide. It's not really an issue for the IMF."
The IMF will focus on restoring the health of the island's stricken banking system, said Rice, adding that "discussions with our European partners and with the Cypriot authorities continue from headquarters."
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