|Bank of Cyprus operations are now severely restricted|
April 5 2013
Some key data about bond purchases by Bank of Cyprus - now the focus of a controversial EU-IMF bailout - is missing, investigators have found.
The gaps were found in computer records studied by a financial consultancy, Alvarez and Marsal, Cypriot media say.
Bank of Cyprus - the island's biggest bank - bought Greek bonds which turned into some 1.9bn euros (£1.6bn; $2.4bn) of losses in the Greek debt crisis.
Depositors with more than 100,000 euros in the bank are now facing a big loss.
The "haircut" for such deposits in Bank of Cyprus is expected to be about 60%.
The money taken from those accounts, and from deposits above 100,000 euros at Laiki (Popular) Bank, will be used by the government to contribute billions towards the bailout.
Strict capital controls - unprecedented for the eurozone - are in force in Cyprus, limiting cash withdrawals to prevent a run on the banks.
The "haircut" - hugely unpopular in Cyprus - is a condition for the EU and IMF to grant a 10bn-euro bailout to rescue the Cypriot economy.'Mass deletion'
The Cyprus Mail website says information provided by Bank of Cyprus was incomplete and data-deleting software was found on some computers there.
There were significant gaps in computer records for the period 2007-2010. It is not yet clear whether the wiping of records was accidental or deliberate. There were signs of mass deletion of data.
The Central Bank of Cyprus says that Alvarez and Marsal are now investigating Laiki too - Cyprus's second largest bank, which is being wound up and folded into Bank of Cyprus.
"The investigation will continue and cover: the purchase of Greek government bonds by Laiki Bank; the expansion of Laiki Bank outside Cyprus; the role and responsibilities of all parties involved," the central bank said on Friday.
The consultancy's report on Bank of Cyprus has been leaked to Cypriot media, but not yet published.
Besides the Greek bond purchases the consultancy also scrutinised Bank of Cyprus operations in Romania and Russia.
The consultancy's findings have been handed over to the Cypriot parliament and the attorney-general, Petros Clerides.
The Cypriot government has appointed a special judicial panel to clarify what happened in the country's financial crash and pinpoint any wrongdoing.