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Greek Cypriot banks to sue the state

11 February 2013

South Cyprus banks are blaming President Christofias and the Central Bank for bringing them to the edge of bankruptcy.

They are now preparing to take legal action against the Central Bank and PIMCO (Investment Company). The banks claim that PIMCO, who were called in as part of the EU bailout to analyse the Greek Cypriot banks’ financial condition had acted unfairly.

PIMCO produced three potential scenarios for the undercapitalised over-invested banks. As a result, PIMCO determined that the banks would need some 10 billion Euros in re-capitalisation. The banks feel that this is a huge and unnecessary expense. They have been meeting with their legal advisors in the south as well as abroad and are preparing lawsuits against the government, the Treasury Ministry, the Central Bank and PIMCO.

The banks also claim that they were encouraged to buy a significant amount of mainland Greece’s debt, despite the government knowing that these investments would result in large losses.

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