25 3 / 2013
"My next encounter with Cyprus happened in June 2011. A non-governmental organisation approached me with what at first seemed an bizarre request. They were holding a conference in London on reunifying Cyprus. Would I be interested delivering a presentation on asset-backed securities?
Unlike the first Cyprus invitation, this time I was clueless. I protested that I knew very little about the tortured history of the divided island – and even if I did, why were ABS relevant? Don’t worry, the organisers said, sending me a briefing note for me to prepare from.
The NGO document explained how plans to reunify the island had foundered on the question of how to compensate Turks or Greeks who had lost land during the partition of the island 40 years ago, without evicting the current occupants of their property. One idea being floated was for certificates to be given to the original owners of the land, linked to their revenues and value. These certificates could be bundled together and securitised, raising cash from investors which could be used to develop the land for tourism. By financial alchemy, that would boost the value of the certificates enough to persuade both sides to sign up to a deal.
Then I understood why the NGO had approached me. They want to bring about the reunification of Cyprus using a structured product."
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