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Haircut of bank deposits in Cypriot banks

The bailout of Cyprus came at a painful price for the clients of the two largest banks of the island: A haircut of 30% -40% on all deposits above 100.000 EUR was convened by the Eurogroup and the Republic of Cyprus amongst other radical measures (merger and creation of a bad bank). Forcing depositors to undertake risks and exposures is not new albeit extremely rare in times of peace. For many legal analysts the legality of such radical measure is heavily contested as it is hurting on some fundamental values of our societies. We are now evaluating whether these measures are in violation of  the Right of Property as it is defined and protected through the  European chart of human rights (First Protocol, art 1) which has been adopted and ratified by all E.U. member States.

Less direct but equally contestable are the ancillary decisions concerning bondholders and minority shareholders allegedly now  placed in the bad bank. We are carefully examining the details of the agreement and of the implementing legal texts in order to evaluate the perspective of a potential lawsuit in front of the European Court of Human Rights in Strasbourg against these decisions.