Cypriot finance minister quits as inquiry begins
'Actions and omissions' that led to crisis will be investigated by judges
Tuesday 02 April 2013
Cyprus's Finance Minister fell on his sword as the government began an investigation into the near-collapse of the nation's economy.
Michalis Sarris, who was criticised for his handling of negotiations with international creditors over the nation's €10bn (£8.45bn) bailout, had been in the role for little more than a month following President Nicos Anastasiades' election victory in February.
He will be replaced by the Labour Minister, Harris Georgiades.
Mr Sarri stepped down after Mr Anastasiades appointed a panel of three former supreme court judges to investigate the country's plunge to the verge of bankruptcy. The President said ordinary citizens shouldering the burden of "actions and omissions" want to see those responsible punished.
Banks were closed for 13 days before opening last Thursday with strict capital controls. Although the central bank loosened some restrictions, the controls are likely to be in place for at least a month.
Laiki, the country's second-largest bank, is to be wound down, with depositors holding more than €100,000 taking major losses. Savers with more than €100,000 at the Bank of Cyprus could also face losses of up to 60 per cent on their savings as part of the rescue deal.
The President urged the judges to investigate his family's business dealings as he fended off newspaper accusations that a company said to be co-owned by one of his relatives took money out of Laiki days before the country agreed to its rescue.
News of the investigation came as official figures showed Cyprus's unemployment rate rising to 14 per cent in February. Grant Lewis, the head of research at Daiwa Capital Markets Europe, warned: "A contraction in GDP of at least 10 per cent this year now looks entirely feasible, with something similar not unrealistic next year too, with unemployment rising above 20 per cent."
There was better news for British depositors saved from heavy losses as £270m of deposits stuck in Laiki were switched to a UK subsidiary of the Bank of Cyprus. The move guarantees the cash of about 5 per cent or 750 of the 15,000 British savers in Laiki who had more than €100,000 in deposits.
The deal sees British savings accounts and current accounts that are in credit transferred to the Bank of Cyprus's UK subsidiary, which comes under the aegis of the Bank of England's new Prudential Regulation Authority. Andrew Bailey, a deputy governor at the Bank of England and the chief executive of the PRA, spent last week thrashing out a deal to protect savers.
Laiki Bank UK was a branch of the Cypriot bank rather than a subsidiary, meaning that Britain was not obliged to protect its depositors. But the cash has been transferred in full and will now come under the UK Financial Services Compensation Scheme, which protects the first £85,000 of British savers.
The UK deal does not cover customers with current accounts in overdraft. These accounts are now frozen at Laiki Bank UK and will not be transferred. Customers in credit will be transferred, but their overdraft facilities have been cancelled.
filmFilm producers sue Warner Bros for $75m over Hobbit films
voicesJust when you thought you could find a man, get married, and have a baby by the age of 35... it turns out you’re too late, says Grace Dent
Swedish stars ask fans for £195 pledges on crowd-funding website
musicAs Mariah Carey and Noddy Holder rake in the royalties from their classics, why there hasn't been a decent festive hit for 20 years?
theatreAuthor Daniel Rosenthal recalls the mishaps that almost brought the curtain down on the likes of John Gielgud and Diana Rigg
lifeAs the Royal Mail plans to phase out deliveries on two wheels, it's no wonder posties are in a spin
musicThe 21-year-old beat Ella Eyre and Chlöe Howl to win the honour
lifeFull of the joys and want to help your fellow man? December isn't the time to do it
Nelson Mandela memorial: ‘Bogus’ interpreter made mockery of Barack Obama’s tribute in Soweto
French café starts charging extra to rude customers
Australia: Gay marriage law reversed by high court less than a week after first weddings
Krokodil in Mexico? Teenager hospitalised after 'injecting drug into her genitals'
Australia incest case: Severely deformed children found in remote farming community after generations of inbreeding
- 1 Nelson Mandela memorial: ‘Bogus’ interpreter made mockery of Barack Obama’s tribute in Soweto
- 2 French café starts charging extra to rude customers
- 3 Australia: Gay marriage law reversed by high court less than a week after first weddings
- 4 Exeter to Edinburgh and back in a day: How one fresher's lost bet left him facing a 900-mile round trip
- 5 Australia incest case: Severely deformed children found in remote farming community after generations of inbreeding
iJobs Money & Business
£44999 - £60001 per annum + Benefits: Pro-Recruitment Group: A Top Tier firm i...
£77099.84 - £96375.26 per annum + Bonus + Benefits : Harrington Starr: My clie...
£45000 - £60000 per annum + Bonus and Package: Harrington Starr: Trading appli...
£50000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: A leading prov...