Greece/Cyprus – Cyprus Popular Bank lodges treaty dispute against Greek government, seeking an equal share in any bank bailout – AMENDED

On 22 November the second largest commercial bank in Cyprus, Cyprus Popular Bank Public Co. Ltd. (Λαϊκή Κυπριακή Τράπεζα Δημόσια Εταιρεία Λτδ), headquartered in Nicosia, issued a public announcement to the effect that on the preceding day the London law firm of Skadden, Arps, Slate, Meagher & Flom LLP, acting on behalf of the bank, had served on the government of Greece a “Notice of Dispute” in accordance with the terms of the 30 March 1992 “Agreement between the Government of the Republic of Cyprus and the Government of the Hellenic Republic for the Mutual Promotion and Protection of Investments” (Συμφωνία μεταξύ της Ελληνικής Δημοκρατίας και της Κυπριακής Δημοκρατίας για την προώθηση και αμοιβαία προστασία των επενδύσεων).  In its complaint the bank argued that under the Agreement it is entitled to completely equal treatment to Greek banks operating in Greece, and that as a result it should have a right to receive a share of any bailout funds that may be given to Greek banks.

As of 30 September 2012 the bank held 10.21 bln EUR in deposits compared to a total of 70.69 bln EUR in deposits among all commercial banks in Cyprus, giving the bank a market share of 14.45% in deposits.  On the same date its total loans stood at 11.72 bln EUR compared to 72.65 bln EUR for the entire commercial banking system in Cyprus, giving the bank a market share of 16.13% in loans.  The bank’s total assets at 30 September 2012 were 30.38 bln EUR, down slightly from the figure of 33.76 bln EUR at 31 Dec. 2011 and considerably below the figure of 42.58 bln EUR for 31 Dec. 2010.

Sources:

Public notice: Ειδοποίηση διαφοράς προς την ελληνική κυβέρνηση (2012-11-22)

Market shares among commercial banks in Cyprus as of 30 Sept. 2012: Deposits: Σύνολο καταθέσεων και μερίδια αγοράς για το 2012

Market shares among commercial banks in Cyprus as of 30 Sept. 2012: Loans: Σύνολο χορηγήσεων και μερίδια αγοράς για το 2012

The bank’s assets as of 30 September 2012: Οικονομικές Καταστάσεις για την εννιαμηνία που έληξε 30/09/2012 (2012-11-28)

Text of the agreement as ratified into law by the Greek parliament: Νόμος 2100/1992 «Κύρωση Συμφωνίας μεταξύ της Ελληνικής Δημοκρατίας και της Κυπριακής Δημοκρατίας για την προώθηση και αμοιβαία προστασία των επενδύσεων» (ΦΕΚ Α΄ 191/2.12.1992) (1992-12-02)

Mark Pleas

Eastern Europe Banking & Deposits Consultant

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