In relation to the sale agreement of the Cypriot banks’ branches in Greece, the Central Bank of Cyprus (CBC) would like to clarify the following:
1. The sale of the branches in Greece was a condition set by Cyprus’s international lenders for the approval of the aid package.
2. The price and terms of the sale were agreed at a political level between Cyprus and Greece in the two Eurogroup meetings in March 2013. As is well known, it is the Ministry of Finance of each country which participates in the Eurogroup meetings.
3. The negotiations conducted by the CBC with the representatives of Piraeus Bank between 23 and 26 March 2013 concerned the conclusion of the legal agreement for the sale of the branches in Greece and not the price and terms of sale.
For example, during the negotiations with Piraeus Bank, the latter requested the inclusion of a term in the contract which would have given the right to Piraeus Bank, under certain conditions, to cancel the agreement. This was not accepted by the CBC and was referred to the Cypriot and Greek ministers of finance, who were in Brussels for the Eurogroup meeting. Another example of issues raised during the negotiations with Piraeus Bank, and which was resolved by the Cypriot and Greek finance ministers, is the question of who would be liable for the taxes resulting from the final transaction.
4. During all the discussions with the Bank of Greece and Piraeus Bank, representatives of the Troika for both Cyprus and Greece were present.
5. As a result of the agreement on the contribution of uninsured depositors in the recapitalisation of both banks, the branches in Greece had to remain closed because we would not have been able to enforce restrictions on the movement of capital and there would have been massive withdrawals of deposits. This would have led to the collapse of Cypriot banks and the activation of the Deposit Protection Fund. It should be noted that the insured deposits in Cypriot branches in Greece were estimated to be around €9 billion.
6. The profits presented by Piraeus Bank are unrealised accounting profits. These will gradually be reversed through the increased provisions for non-performing loans.