Clarification for Bank of Cyprus

We would like to inform you that the Central Bank of Cyprus has issued a clarification regarding the conversion of uninsured deposits in the Bank of Cyprus to share capital.

Clarification from the Central Bank of Cyprus on the Conversion of Uninsured Deposits in the Bank of Cyprus to Share Capital

Further to the recent articles in the Press about the level of conversion of uninsured deposits in the Bank of Cyprus to share capital, the Central Bank of Cyprus (CBC) clarifies the following:

  1. The decision for the conversion of the uninsured deposits to share capital was taken on the basis of the political agreement reached in the meeting of Eurogroup on 25th of March 2013. This has become known as the “bail-in” solution.
  1. The uninsured deposits per depositor are the sum of the deposits in the Bank of Cyprus of over EUR100,000 after any set-off against existing loans of the same depositor is taken into account.
  1. On the basis of the Resolution with Own Funds of Bank of Cyprus Public Company Limited Decree of 2013, the following decisions have been taken in relation to the uninsured deposits:

(a)      37,5% of the amount has been automatically converted into Class A shares with voting rights and dividends in the Bank of Cyprus.

(b)      22,5% has been temporarily frozen and, potentially, part or all of it may be converted into Class A shares with voting rights and dividends in the Bank of Cyprus for the purpose of its full recapitalisation.

(c)      The decision for conversion of part or all of the 22.5% into share capital will be taken no later than within 90 days of the completion of the valuation of assets and liabilities of the Bank of Cyprus by an independent evaluator, which, in accordance with the terms of the Agreement, must be prepared no later than the end of June 2013.

(d)      After the final confirmation of the proportion of conversion into shares, in cases where part or the entirety of the 22.5% will be converted into deposits, interest will be calculated retrospectively with a small increment.

(e)      The remaining 40% was frozen temporarily for reasons of liquidity. Nevertheless, interest continues to be accrued on the basis of the existing interest rate with an increment of 10 percentage points. It should be noted that on 2nd of April 2013, with a written communication from the Resolution Authority, instructions were given for the unfreezing of ¼ of this amount, meaning that the percentage of uninsured deposits which remain frozen is 30%.

 

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