Brussels, 20/11/2014 (Agence Europe) - A 40-page study commissioned by the Cypriot government to determine the extent to which the failure of Laiki endangered the island's economy, has slammed the Central Bank of Cyprus (CBC) and the previous government. The report, which was published online by the New York Times on Wednesday 19 November, explains that Laiki, the second-largest bank of the country, which was dismantled with heavy losses to depositors, “was insolvent before the haircut of the Greek bonds; after the haircut, the bank had little chance to survive”. According to the New York Times, the report highlights considerable evidence of the insolvency of the bank which Panicos Demetriades and Athanasios Orphanides, then governors of the Central Bank of the island, chose to ignore. Orphanides reported to his colleagues at the ECB that the bank was solvent when it was in actual fact bankrupt, the report explains.
Demetriades also comes under fire due to his senior position and is accused of having approved, together with the former government of the island, a haircut on the banking deposits without having informed the new government, which took over in March 2013, of this, during negotiations for the eurozone bailout plan. “The artificial prolongation of its viability caused the taxpayer 1.8 billion euros as direct damage”, the report concludes. (EL)