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Branches of Cypriot banks to be under the control of the Greek financial system

22 March 2013 / 18:03:28  GRReporter
2560 reads

Victoria Mindova

After a week of pains, the government of Cyprus has officially announced that the two countries have come to an agreement and Greece will take over the recovery of Cypriot bank branches. "Following bilateral discussions between President Nikos Anastasiadis and Greek Prime Minister Antonis Samaras, we confirm that the negotiations connected with the separation of the Greek branches of the Cypriot banks have been completed and the most favourable conditions (under the present circumstances) with significant benefits for the Cypriot side have been agreed," reads the official message from Nicosia.

Greek Finance Minister Yiannis Stournaras has confirmed the news and said, "Greece guarantees all deposits of citizens in Cypriot banks. We have been working night and day to protect the stability of the financial system and to find a sustainable solution for Cyprus and its citizens." In the late hours of the day, the Financial Stability Fund will hold an extraordinary meeting to announce the Greek financial institution or institutions, which will take control over the Cypriot branches. The latest information indicates that most probably the "receivers" will be Alpha Bank and Piraeus Bank.

Although the two countries have reached an agreement to save the Cypriot bank branches in Greece, the tension has moved from Nicosia to Athens. The Greek banks and the state authorities have announced that they will not accept cheques of Cypriot banks until they recover their activity. The Greek banks and the state authorities have announced that they will not accept cheques of Cypriot banks until they recover their activity.

Cypriot banks will remain closed until the government reaches an agreement on a new bailout and until Eurogroup approves it. Banks are expected to reopen on Tuesday, 26 March. Laiki Bank has put a 260-euro ceiling on withdrawals from ATMs and Skai TV reports that people can no longer pay for goods and services with credit cards.

The financial crisis in Cyprus has provoked turmoil in Greece. Employees of Laiki Bank and Cyprus Bank have launched a campaign against the possible dismissals and sought political assurances that they will  not be offered as a sacrifice to the new round of the economic crisis. Representatives of employees of Laiki Bank gathered on Friday morning outside the Ministry of Finance to give Yiannis Surnaras their petition with which they demand to retain their jobs.

"Despite all the negative consequences that can occur in Cyprus, the Greek government has assured us that the Cypriot branches in Athens and other cities will continue to operate normally. The assets, liabilities and the total number of employees will be transferred to the Greek financial institutions," said Yiannis Roussos, chairman of the employees of Laiki Bank, after his visit to the Ministry of Finance. Their colleagues from Cyprus Bank have filed the same petition, but in the Greek Parliament.

The total number of employees in Cypriot banks in Greece exceeds 5,500. Despite all assurances that rights and jobs will be secured, bank employees still worry. Their greatest concern is that the changes will bring cuts and they may become the new additions to the ranks of the unemployed in Greece. Andreas Artemis, head of Cyprus Bank, warns that if the government of Cyprus does not quickly take a decision to save the country, not just the banks, but also the entire economy will collapse. "If we return to the Cyprus pound this will cause irreparable damage not only to the property of all citizens, but we will drown in the viscous circle of constant recession and hyper-inflation."

The latest information indicates that the Financial Stability Fund in Athens has accepted the proposal of Piraeus Bank and it will buy the branches of Laiki Bank and Cyprus Bank in Greece. The official confirmation is expected after the European Commission for Protection of Competition gives its consent. According to To Vima, the branch of Hellenic Bank in Greece will remain independent and will not merge with another local financial institution for the time being.

 

Tags: EconomyMarketsCyprusRescue programmeCrisisGreeceBank branches
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