Cyprus Savers Sue ECB, Commission Amid Losses in Rescue Plan
Cyprus bank depositors sued the European Central Bank and the European Commission for putting them in the firing line as part of last year’s rescue package for the crisis-hit Mediterranean nation.
The savers filed four lawsuits demanding compensation after they were hit by forced losses on deposits at Bank of Cyprus Pcl and Cyprus Popular Bank Pcl.
The ECB and the commission “deprived” the savers of their money and “manifestly and gravely disregarded the limits on their power” by inducing “the premature passing of a bail-in tool on deposits,” according to the lawsuits. The four suits also challenge “restrictions on the movement of money preventing deposit holders from withdrawing and/or transferring their funds to safer” lenders.
After a tumultuous week in which an initial aid plan fell apart, European governments and the International Monetary Fund agreed to loan Cyprus 10 billion euros ($13.6 billion) as long as the country liquidated its second-largest bank and forced losses on bank bondholders and deposits of more than 100,000 euros.
The concessions were demanded by authorities in a bid to shrink the country’s banking industry and led to Cyprus imposing the first capital controls in the euro area.
Details of the filings at the EU’s General Court were published today in the EU’s Official Journal. The savers don’t say how much money they lost by the so-called haircuts on their deposits.
The lawsuits add to 12 other Cyprus-related suits filed last year at the EU court, the bloc’s second-highest legal authority, that are also challenging EU and ECB decisions
The ECB and commission declined to comment because the cases are ongoing.
The cases are Anastasiou v Commission and ECB, T-149/14; Pavlides v Commission and ECB, T-150/14; Vassiliou v Commission and ECB, T-151/14; and Medilab v Commission and ECB, T-152/14.