Brussels, 28/10/2013 (Agence Europe) - The troika of lenders (the European Commission, the European Central Bank and the International Monetary Fund) were back in Nicosia on Monday 28 October for a quarterly review of implementation of the Cypriot structural adjustment programme, while leaked confidential documents from the Central Bank of Cyprus (CBC) may cause more sparks to fly with the government. On Saturday 26 October, the CBC announced that it would be examining the size of special fees paid to consultants Alvarez & Marsal under an agreement signed with CBC governor Panicos Demetriades. The Financial Times says the bank had challenged the deal earlier in the week, as it had been signed without the knowledge of the banks' management board.
The Cypriot public prosecutor ordered an investigation last week after leaks in the Cypriot press of an email sent by Alvarez & Marsal to the governor of the central bank, referring to an agreement between them for the payment of commission of 0.1% of the total sum injected into the country's banks to recapitalise them, in other words a total of €11 million on top of fees already paid to the company, which was commissioned by the central bank to look into the causes of the crisis and was also involved in the restructuring of the island's biggest bank, Bank of Cyprus (BoC). In order to recapitalise BoC, the Cypriot government raided all deposits of over €100,000, taking a total of 47.5% from the accounts. News website Sigmalive says that the 0.1% was not taken from the raided savings, but from the aid provided by the European Stability Mechanism under the bailout agreed with the eurozone. A&M is reported to have offered last month to reduce the commission to €4.5 million. The central bank published a press release at the weekend saying that it had taken note of A&M's decision to leave the size of the commission to the bank's discretion. Earlier in the week, it had said that payment of the commission was not justified, however, quoting the view of an external legal advisor. Another CBC press release a little later said: “These press reports are part of orchestrated efforts being made by certain groups to compel the Governor of the CBC to resign.”
Relations between the central bank and the government have been frosty for several months and each of the troika institutions has already had to intervene with the president of Cyprus, Nicos Anastasiades, to stress that central bank independence is guaranteed by the EU treaties. Anastasiades recently revealed that he was planning to remove Demetriades from his job by providing the competent authorities with documents that he said proved Demetriades' incompetence in management of the crisis. In Brussels on Friday 25 October, Anastasiades met with the president of the European Commission, José Manuel Barroso. The Commission refused to comment after the meeting, but a source said on the fringes of the summit that the two men had probably touched on the central question. (EL/transl.fl)