Business World

Thursday 23 November 2017

Irish based in Cyprus react negatively to bailout deal

Shane Phelan in Nicosia

"THEY have killed our golden goose and they are now taking the eggs."

These words, spoken by Dublin-born Bernadette Charolambus, pretty much sum up the reaction of Cypriot-based Irish to the €10bn EU/IMF bailout deal which will see thousands lose their jobs in the country's banks and large investors losing billions in deposits.

Under the deal, agreed in Brussels in the early hours of this morning, bank deposits of up to €100,000 will be saved. But accounts holding more than €100,000 in the country's two main banks will be frozen and subjected to huge levies. It is expected large depositors at one of the lenders, Popular Bank of Cyprus (Laiki), will be completely wiped out as the bank is wound down.

Mrs Charolambus, a conference administrator based in Limassol, who runs the Cyprus-Ireland Network, a group forging links between the two countries, fears the penal terms of the deal will decimate the financial services sector here.

"From what we see, Cyprus is finished. We are going to be saddled with these huge debts for years to come," she said.

"It will kill financial services, which is the main industry here. Offshore companies are going to ship out.

"They have destroyed Cyprus. It is a disaster. How the country is going to recover from this, I don't know."

Thomas Keane, an Irish lawyer working with foreign investors in Cyprus, was equally downbeat.

He expects up to 8,500 jobs to be lost when Laiki closes.

"They (the Euro Group) say this will restore confidence in the Cyprus banking system, and result in growth. I'm sorry, but I don't see that at all. I don't see anything at all in the programme that is going to restore confidence in the banking system," he said.

Mr Keane said the long term effect of the deal, shrinking the country's banking sector, would severely limit the country's ability to repay the bailout debt.

"You are looking at depositors and foreign investors with substantial deposits in the two Cypriot banks suffering quite a substantial hit," he said.

"As a consequence the credibility of Cyprus as a financial centre will be greatly damaged. This will result in a move away from Cyprus -  a reduction in international transactions here, which in turn is going to reduce the tax take of the government."

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