Two Polish depositors lost their arbitration suit over the Bank of Cyprus haircut and were ordered to pay legal fees by the Stockholm Chamber of Commerce, said the attorney-general’s office.
The depositors sued the nationalised bank for 306,472 Euros plus 3.8 million in lost interest payments as of March 25th, 2013. In March 2013, the government and the Eurogroup agreed that Bank of Cyprus would take a large percentage of depositors’ cash to recapitalise the banking system after Laiki Bank collapsed. Depositors’ cash was switched with Bank of Cyprus shares instead.
In addition to the money they already lost, the investors now have to pay 1.1 million Euros to cover 70 percent of the Republic of Cyprus’ legal fees and 114,300 Euros to the arbitration court.
The Republic of Cyprus was represented by Curtis, Mallet-Prevost, Colt & Mosle LLP.
The economy is still suffering the prolonged after-effects of the financial and economic crisis that came to a head in 2013. There’s a new crisis – the intense cash-flow crunch. The banks are hanging onto their (or depositors’) money for dear life. After Laiki Bank collapsed and Bank of Cyprus took everyone’s cash to recapitalise, the banks are cautious about further risks and are stingy about loans. Unemployment is still a big concern because companies don’t have the financial resources to invest in new jobs. Budgets are still low, shops are still shuttered, spending is still carefully controlled. Salaries are too low. Non-performing loans are too high so getting new loans approved is a paperwork nightmare. The property market is in the pits. State budgets (thankfully) are being strictly monitored.
The lack of cash-flow needs attention, since it could turn into a long-term drain on the real economy’s ability to bounce back.