23/01/2013

PRESS RELEASE

• Commencement of legal proceedings against the Republic of Cyprus

• Initial appeal to immediately restitute CYPRUS POPULAR BANK's private ownership in order to moderate shareholders'

losses and the bank's recapitalization needs

• Alternatively, MIG will seek as compensation from the Republic of Cyprus the whole amount of its investment in CYPRUS

POPULAR BANK as well as the incurred losses

The Chairman of Marfin Investment Group (MIG), Mr. Andreas Vgenopoulos, during a press conference today requested the immediate restitution of CYPRUS POPULAR BANK's private ownership and the rectification of all arbitrary, illegal and discriminating actions, upon which CYPRUS POPULAR BANK was nationalized. Mr. Vgenopoulos announced that MIG formally commenced legal proceedings against the Republic of Cyprus, following the procedure provisioned by the bilateral international treaty regarding the mutual promotion and protection of investments between Cyprus and Greece.
Mr. Vgenopoulos announced that the Notice of Dispute was served today, 23 January 2013, on the Republic of Cyprus, an action designating the formal commencement of legal proceedings. MIG requests restitution (restitutio in natura) of CYPRUS POPULAR BANK'S private ownership, aimed at protecting its investment in CYPRUS POPULAR BANK amounting to Euro 823,863,584. Failing this, MIG will proceed to claim the full amount of its investment as well as any other incurred losses related to this investment, due to breaches of the articles of the bilateral international treaty by the Republic of Cyprus.
Mr. Vgenopoulos stated that: "we have no doubt that if there is no imminent agreement with the Republic of Cyprus on the restitution (restitutio in natura) of private ownership as part of an amicable resolution of the dispute between the parties, prior to the referral of the case to an International Arbitration Tribunal, then MIG will be vindicated completely and fully compensated for its investment in CYPRUS POPULAR BANK via legal proceedings. Nonetheless, instead of adding yet another great burden to the Cypriot people, MIG would prefer to be given the opportunity to protect its investment as well as to reduce the losses incurred by CYPRUS POPULAR BANK and consequently the funds the Republic of Cyprus is currently seeking from the European support mechanism".
Specifically, MIG claims that the Republic of Cyprus has breached its obligations arising from the following:
1. Article 2 of the bilateral international treaty denoting that MIG's investment in Cyprus
"shall always enjoy fair treatment and full protection and security" and that "in no way shall be hindered by measures of an arbitrary or discretionary nature"

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2. Article 3 of the bilateral international treaty denoting that MIG's investment in Cyprus shall not be treated "less favourably than that which Cyprus accords to the investment of its own investors", and
3. Article 4 of the bilateral international treaty denoting that MIG's investment "is not subject to expropriation, nationalization or any other measures tantamount to expropriation or nationalization", and only under certain conditions which however, were not met in relation to this investment.
During the press conference, MIG's Chairman, presented evidence documenting violations by the Republic of Cyprus, which resulted in the nationalization of CYPRUS POPULAR BANK and the losses incurred by the bank and its shareholders. In addition, the bank's management, which had been elected by its shareholders, was arbitrarily and illegally replaced by a management team appointed by the Republic of Cyprus which led to the large losses subsequently incurred by the bank.
One of the most important pieces of evidence presented is that, under European Directives, Greek banks will retain their private ownership provided that private investors contribute
10% of the bank's recapitalization needs. CYPRUS POPULAR BANK old management's formal request to retain the bank's private ownership was based on private investors contributing at least 51% of the recapitalization needs, and that was rejected by the Cypriot Government. Instead, the Cypriot Government referred to the relevant law provided that if the Cypriot state contributes even Euro 1 it is entitled to appoint the majority of the Board of Directors, which resulted in the complete demoralization of all private investors and the nearly universal nationalization of the bank.
At the same time, the former Governor of Central Bank of Cyprus asserted that the required capital needs for another Cyprus bank were lower than the bank's real recapitalization needs and this bank did not request support from the Cypriot state. Moreover, once the same bank's recapitalization needs proved higher than originally projected, the Cypriot state did not intervene, enabling the bank to maintain its full private ownership and management, while seeking to obtain the best possible terms in the forthcoming recapitalization, aimed at
protecting the interests of its shareholders.

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