Watchdog did not have timely Bank of Cyprus data on Greek debt: report

Fri Apr 5, 2013 2:04pm EDT
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By Michele Kambas

NICOSIA (Reuters) - Regulators asked Cyprus's largest bank to provide information about its ultimately disastrous holdings of Greek debt as long as three years ago but got no immediate response and did not follow up, an external investigation said.

A report seen by Reuters said that the recent investigation was hampered by "unnecessary delays" in getting documentation from commercial Bank of Cyprus BOC.CY - one of the banks at the center of Cyprus's international bailout - and that some computers at the bank may have been wiped.

A Bank of Cyprus (BOC) spokesman declined to comment, saying the bank had not been officially briefed on the report.

The probe was conducted by professional services firm Alvarez & Marsal at the instigation of Cyprus's central bank. The company had a broad mandate to investigate the banking crisis affecting Cyprus, which eventually led to the island requiring a bailout from international lenders.

The central bank declined to comment on the contents of the report but said in a statement:

"The investigation will continue, and cover the purchase of Greek government bonds by the Popular Bank, including the expansion of Popular overseas. In parallel it will also examine the role and possible responsibilities of all concerned."

In Bank of Cyprus's case the inquiry was focused on the circumstances leading to its heavy, loss-making exposure to Greek government bonds

The report says BOC was not in breach of regulatory limits, despite a high concentration of Greek debt. But it said there was early regulatory concern about the bank's exposure to Greek government bonds (GGBs).   Continued...

A worker paints a wall above a branch of Bank of Cyprus in Bucharest April 1, 2013. REUTERS/Bogdan Cristel