Central bank to assume part of legal costs for lawsuits tabled by bondholders
4/7/2023 10:21
The Central Bank of Cyprus announced it will accept requests for reduced legal costs in lawsuits filed by bondholders of Bank of Cyprus or Laiki Bank, who saw their bonds wiped out during the 2013 financial crisis.
According to a press release issued by the CBC, the requests will concern lawsuits which have been submitted against the CBC and are about to be withdrawn, lawsuits, which have already been withdrawn and the payment of legal costs in favor of the CBC is pending, as well as lawsuits for which the Courts have ruled in favour of the CBC while a decision on legal costs in favour of the CBC is pending.
The CBC said that if natural or legal persons notify the bank that they intend to withdraw their lawsuit, the CBC will assume up to 80% of the legal costs. As a rule, in both civil and private criminal cases, the losing party in a procedure will be ordered to pay all the costs.
Furthermore, the CBC said that it will bear the legal costs in full in case of recipients of guaranteed minimum income, or companies which have been liquidated. This also applies in cases which have been already withdrawn or cases for which Courts have already ruled in favour of the CBC.
The CBC also said that in cases of lawsuits tabled by natural persons with an annual gross income not exceeding €35,000 it will bear 70% of the legal costs ruled in its favour, while it would bear 30% in cases of both natural and legal persons that do not fall in the above criteria.
Moreover, the CBC said that on July 10 it will publish in its website the detailed procedure under which the applicants should submit their requests, which should be submitted by September 8.
During the 2013 financial crisis, Laiki Bank, Cyprus' second largest lender was liquidated, with depositors over €100,000 losing up to 80% of their money. Furthermore, its convertible bonds have been wiped out. Bank of Cyprus, Cyprus’ largest lender requested financial assistance with the bondholders being wiped out as part of the bailout. According to the IMF convertible bonds amounting to €1.3 billion have been wiped out, €0.8 billion in Laiki Bank and €0.5 billion in Bank of Cyprus. Under the bailout agreement, Bank of Cyprus was capitalised using the bail-in tool, under which 46.5% of uninsured deposits (over €100,000) have been converted to equity.
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