Insider Economy Bill provides initial compensation for all who suffered haircut on deposits

Bill provides initial compensation for all who suffered haircut on deposits

A proposed bill which was debated yesterday before the House Finance Committee provides that people and legal persons who suffered haircut on deposits back in March 2013 when Cyprus’ banking system collapsed will initially be eligible for compensation.

Under the bill, drafted by ruling Disy and centre-right Diko, no one will initially be excluded from the Solidarity Fund’s compensation over losses. Not even Russian millionaires who saw their deposits shrink and most probably got granted a Cypriot citizenship by the government over some compensation. Or senior bank employees who were pushing clients to buy controversial bonds.

Diko MP Angelos Votsis who heads the House Finance Committee has clarified that the law would not rule out anybody. But that a Solidarity Fund special committee would be set up to define the management plan on losses and on the criteria to be applied.

This plan would have to be approved by the Council of Ministers before it comes into force. Votsis dismissed the position of socialist Edek leader Marinos Sizopoulos that the specific draft action plan should be approved by the parliament and not the government.

Essentially, the draft law provides that the Solidarity Fund will assist in the replacement of losses suffered by persons who at the specific time were actually private clients. Also, that the preparation and implementation of the replacement plan will be determined by the Fund’s special committee and approved by the Council of Ministers upon submission of a relevant proposal.

A Ministry of Finance spokesman warned that there will be an impact on public finances if legal entities were included into the Fund’s beneficiaries. As a matter of fact, Finance Minister Harris Georgiades sent a letter sent to the House, yesterday, stressing that the draft law could lead to a possible need for state assistance.

The Ministry also warned that if the draft law gets adopted, it is likely that the overall legislation would be incompatible with that of the EU.

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