The former head of bailed-out Bank of Cyprus accused Cypriot authorities of making the bank a scapegoat to cover their own shortcomings in running the island's economy.
"If the government had acted to restore fiscal imbalances, even in the first quarter of 2012, the measures would be infinitely less painful then they are today", said Andreas Eliades, who was chief executive officer at Bank of Cyprus from 2005 until mid-2012. Cyprus became the fourth eurozone member to require an international bailout when it secured a €10 billion rescue package in March. But as part of the aid deal, the island agreed to seize the cash of big depositors at Bank of Cyprus, the island's biggest bank, and wound down second-biggest lender Laiki Bank with Bank of Cyprus assuming some of its assets.
Bank of Cyprus lost €1.8 billion in Greek bond holdings. "We couldn't predict there would be an 80 per cent writedown in bonds", Eliades told a judicial inquiry looking into causes of the Cypriot crisis. He said the decision to purchase Greek bonds wasn't his, but sovereign debt had always been considered a safe-haven asset. Eliades, who resigned under pressure from the Cypriot central bank, said Cyprus would not have needed any external help if it had controlled runaway deficits. The island was shut out of international capital markets in May 2011.
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