The Chairman of the Bank of Cyprus Christis Hassapis has warned that excessive publicity given to the closure of accounts in the Bank of Cyprus UK, by British regulators, harms the financial system and the economy of Cyprus.

“We are shooting ourselves in the foot,” he said here today.

The Governor of the Cyprus Central Bank (CBC) Panicos Demetriades told lawmakers on Tuesday that the accounts, mostly belonging to unnamed Cypriots, had been shut down as part of anti-money laundering checks on politically exposed persons (PEPs) who were considered high risk customers.

Hassapis, who met on Friday with the Secretary General of the Green Party George Perdikis, clarified that the closing of accounts was not related to money laundering or lack of transparency.

“There was no reason to make such noise about PEPs. We are shooting ourselves in the foot without reason,” he warned.

BoC Chairman explained that the closing of accounts was decided during a review of accounts carried out once a year, as demanded by the supervisory authorities, noting that some of those accounts had a very low credit balance and updating them would have had high costs on the Bank.

“The accounts were closed during an annual review to bring them up to date and there is no money laundering involved,” he stressed.

“All this noise harms Cyprus, the banking system and the BoC and it would be better to avoid statements about money laundering” Hassapis pointed out.

According to the Chairman of the BoC ten accounts closed out of 110 and another 80 are being checked out. He also said that a list of the holders of the accounts will be sent on Monday to the House Committee on Institutions, Merit and the Commissioner for Administration (Ombudsman).

Hassapis said the Bank will find ways to help borrowers in trouble – households and businesses- who prove unable to repay their loans, but warned that the Bank will take measures to recover loans from debtors who are not paying, believing that the Bank will close down.

He also said that BoC will seek to reduce lending rates in the coming months and noted that already BoC’s mortgage interest rate is 1% lower than in other banks.

On March 25 2013 Cyprus and the Troika agreed on a €10 billion bailout which featured an unprecedented haircut on uninsured deposits in a bid to recapitalize the Bank of Cyprus, the island`s largest lender. The bailout also provided that Cyprus Popular Bank, the island`s second largest bank would be wound down with its good part absorbed by the Bank of Cyprus