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    Bank of Cyprus executives scrutinized

    LONDON — Two of the most senior executives at Bank of Cyprus may have deleted crucial e-mail documents last year relating to what proved to be a disastrous decision to invest heavily in Greek government bonds just before Greece’s international bailout in 2010, according to an investigative report commissioned by the central bank of Cyprus.

    The report said forensic specialists found that the computer belonging to the bank’s former chief executive, Andreas Eliades, who was forced to resign last summer, had ‘‘wiping software loaded which is not part of the standard software installations’’ at the Bank of Cyprus.

    Investigators also found such software on the computer of Christakis Patsalides, a senior executive in the bank’s treasury department who, according to the report’s findings, was the mastermind behind the decision to buy the Greek government bonds. Patsalides has also left the bank.


    Efforts to reach Eliades and Patsalides late Thursday were not immediately successful. The report said Eliades did not ‘‘participate or assist’’ in the investigation, despite being urged to do so by the bank and its outside lawyers.

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    The Bank of Cyprus, long considered the better run of the two large banks that have been at the center of the Cypriot bailout debacle, decided to speculate in high-yielding Greek bonds in 2010, just as the Greek government was running out of money.

    That decision resulted in the Bank of Cyprus sustaining a loss of $2.5 billion, when bond investors were eventually forced to take a 75 percent discount on the value of those bonds under the final terms of the Greek bailout, worked out last year.

    That loss, and the larger one absorbed by the other big Cypriot bank, Laiki Bank, in a similarly misguided investment foray, together totaled $5.8 billion.

    That was more than Cyprus, with a gross domestic product of only $23 billion, was able to sustain. And the losses led to the near-collapse of the Cypriot banking sector, leading the island’s government to seek a $12.9 billion bailout from the troika of international lenders: the International Monetary Fund, the European Commission and the European Central Bank.


    Under the terms of the bailout, the banks’ biggest depositors will be forced to take losses of as much as 60 percent to help absorb the cost of cleaning up Cyprus’s financial mess.

    The issue of how the banks became laden with Greek government bonds has become an explosive issue in Cyprus.

    The situation has politicians and regulators scrambling to explain to furious taxpayers why the country has been forced to impose harsh measures on bank clients of all sizes, including restrictions on fund transfers and withdrawals.

    A committee of judges has already been appointed by the government to get to the bottom of the matter.

    The report that surfaced Thursday was by the Cypriot central bank last August, well before the country’s bailout was made final.