Bloomberg reported that depositors of Bank of Cyprus and Cyprus Popular Bank Pcl are seeking compensation for the losses they were forced to incur on their deposits following the implementation of the rescue package for their crisis-hit Mediterranean nation.
The details of the lawsuits were published today in the EU's Official Journal. The lawsuits were reportedly filed at the EU's General Court. The filings did not indicate how much money did the complainants have lost attributed to the so-called haircuts on their deposits.
The complainants have named the European Central Bank and the European Commission as defendants in the lawsuit, whom they accused of being out of line in terms of their power by inducing the premature passing of a measure that affects their deposits.
The depositors had filed four lawsuits against the central bank of Europe and the EU regulator, challenging the restrictions on the movement of money, which prevents deposit accountholders from transferring and/or withdrawing their funds to more safer lenders. The latest lawsuits now add to 12 Cyprus-related cases filed last year at the EU court, which is the euro bloc's second-highest legal authority. The 12 lawsuits all have a theme, which was to challenge EU and ECB decisions.
The news agency said that European governments and the International Monetary Fund resorted to an agreement, which would have them extend a loan to the financially-beleaguered Cyprus worth 10 billion euros or $13.6 billion. The agreement was made after an initial bailout plan fell through, capping a tumultuous week. The agreement comes under the condition that the Mediterranean country liquidates its second-largest bank, which would in effect, forced losses on bank deposits and bondholders of over a hundred thousand euros each.
Bloomberg said that the concessions were demanded by the authorities in the hopes of reducing the the banking industry in the country, which also led to Cyprus imposing the first capital controls in the EU area.
When Bloomberg asked the ECB and the commission for comment, they both declined, citing the fact that the cases are still ongoing.
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