Abstract
At the European Council meeting on 26 October 2011, EU national governments agreed that they would be providing a backstop for banks that needed recapitalisation following the Europe-wide stress tests carried out by the European Banking Authority (EBA) in 2011.
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Notes
- 1.
The interest rate on the Russian loan was 4.5% p.a. compared to less than 1% that Greece was paying on its loans from the international creditors (there was, however, no conditionality attached). See: http://www.euractiv.com/section/europe-s-east/news/russia-bails-out-cash-strapped-cyprus/. The government did not, at the time, disclose that the agreement with the Russian Federation was that the loan had to be repaid in full five years later.
- 2.
Laiki had raised capital amounting to €480 million euro in February 2011 through a rights issue at €1.0 per share, the largest issue ever until that time. By October of that year, the stock was already trading at below 40 cents and there were no signs of it stabilising there.
- 3.
Kazamias resigned in February 2012 stating health reasons.
- 4.
Although in Ireland the existence of the letter was known, it wasn’t until November 2014 that the ECB made it public, together with related correspondence. See Appendix 1.
- 5.
I first learnt about that letter a year, or so, later when the proposal to release it was discussed at the ECB .
- 6.
For example, in the early stages of the discussions, the discussions, the IMF had put forward the idea that the banks could have been recapitalised directly from the European Stability Mechanism . Europe, however, was not prepared to accept that.
- 7.
Christofias continued to believe until well into the autumn of 2012 that it was a matter of time before another Russian loan would materialise.
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Appendix: Irish Letters
Appendix: Irish Letters
Source: European Central Bank
https://www.ecb.europa.eu/press/html/irish-letters.en.html
‘On 6 November 2014, the Governing Council of the European Central Bank decided to publish a letter written by former ECB president Jean-Claude Trichet on behalf of the Governing Council to then Irish Finance minister Brian Lenihan in November 2010.
With this decision, the ECB honoured the European Ombudsman’s call for the Governing Council to re-consider the release of the letter. The Governing Council also decided to disclose a further three letters that were part of correspondence between the ECB and the Irish authorities in the run-up to the official application of Ireland for support under an EU/IMF adjustment programme.
Also included below are public documents with statements and positions of the ECB on Ireland ’.
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Demetriades, P. (2017). Buying Time. In: A Diary of the Euro Crisis in Cyprus. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-62223-1_4
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