Cypriot MPs will next week investigate a list of several million euros of alleged loans to politicians and others said to have been written off by the two banks at the center of the island's financial crisis.
Marios Mavrides, a deputy with the conservative Disy party of President Nicos Anastasiades, told Agence France Presse on Saturday "there is an ad hoc committee that will be investigating these privileged loans."
The list focuses on the activities of ailing lenders Laiki (Popular) Bank and the Bank of Cyprus, as well as Hellenic Bank, and was published on the website of Greek newspaper Ethnos.
Among those named, some have come forward to deny any preferential treatment or wrongdoing, and have threatened legal action.
Under a bailout deal reached this week with the European Union, International Monetary Fund and European Central Bank, Laiki, with billions of euros in losses, is to be wound down.
In turn, Laiki's healthy assets are to be folded into Bank of Cyprus, where depositors faced a "haircut" of up to 60 percent on balances above 100,000 euros.
On Thursday, the cabinet appointed a panel of three ex-supreme court judges to investigate whether criminal activity was involved in the island's banking meltdown.
Responding to the reports of favorable treatment, government spokesman Christos Stylianides said on Friday that the "government reaffirms its position to fully investigate all aspects of the crisis in the banking sector and its impact on the wider economy."
This would include matters "related to the provision or remission or reduction of loans or deletion of guarantees or providing other facilities from banks... and whether they were based on the correct procedures for guarantees or collateral."
Disy MP Prodromos Prodromou, whose name was on the list, was quoted by the English-language Cyprus Mail on Saturday as denying that he ever had a loan written off.
He said the case involved forgery relating to his bank account and that the culprit had been tried and convicted. He said he will sue for libel.
Diko MP Athena Kyriakidou said in a written statement she was not named but her ex-husband and brother were. She said they did not receive privileged loans and called the reports "scandalous."
Former Larnaca mayor Andreas Moyseos said he too was taking legal action against Ethnos.
"For me it is clear beyond any doubt that this is a conspiracy that will not go unnoticed," he said.
Banks resumed normal trading hours on Friday a day after reopening peacefully following a nearly two-week shutdown as Cyprus negotiated the 10-billion-euro ($13-billion) rescue package.
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