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Archbishop rallies BoC shareholders

Traditional values Archbishop Chrysostomos

By Elias Hazou

ARCHBISHOP Chrysostomos took centre stage yesterday at a gathering of old Bank of Cyprus (BoC) shareholders making a play for control of the lender.

By a show of hands, hundreds of ordinary shareholders – many of whom were all but wiped out after the bank was bailed-in to recapitalize it – voted to appoint a coordinating panel with a view to forming an association.

“Strength in numbers” was the rallying cry in a packed hall at Nicosia’s Hilton Park hotel.

The top cleric set the tone of yesterday’s proceedings with a short intro, before conceding the floor to “the experts,” as he put it.

Chrysostomos was flanked by a panel of high-powered lawyers and accountants, who proposed that a proxy be given to the Archbishopric to represent thousands of small BoC shareholders who want a say in the bank’s upcoming annual general meeting.

The AGM, which will elect the bank’s new board of directors, has been scheduled for September 10.

The fledgling group’s broad aim is to coalesce into a block to counter the 18 per cent held by ‘legacy’ Laiki creditors in BoC and the around 12 per cent held by mostly Russian and Ukrainian depositors represented by various Cypriot law firms.

The legacy Laiki creditors are represented by an administrator, who was appointed by the Central Bank.

And today, lawyers acting on behalf of the Archbishopric will be filing an application at the Nicosia district court seeking an interim court order stripping the legacy Laiki creditors from the right to vote at the AGM.

Through the interim court order, the old shareholders aim to force a delay of the AGM until the bank releases its new balance sheet.

The bank has yet to post its consolidated accounts. A number of lawyers, like Kypros Chrysostomides and Christos Triantafyllides, argue there is a discrepancy of anywhere from €2.3bn to €2.6bn in funds that should have been credited to old shareholders – a glitch that could mean that pre-bail-in shareholders at BoC would see their stake revised from a diluted 1 per cent to nearer 40 per cent.

Under the Bailing-in of Bank of Cyprus Public Company Limited Decree of 2013 (as amended in July), the nominal value of all ordinary shares was reduced from €1.00 each to ordinary shares of nominal value of €0.01 each.

The value of the old shares is the subject of separate applications already filed with the Supreme Court.

Old ordinary shareholders and their lawyers are contesting this value, calling it arbitrary at best.

They demand that the Central Bank promptly release the findings of audit firm KPMG, which carried out an independent evaluation of BoC’s assets.

The head of the Securities and Exchange Commission has also urged the bank to post its balance sheet before the AGM.

The stock of old shareholders of Bank of Cyprus have been demoted to “class D,” which gives neither voting nor dividend rights.

Ordinary shareholders accuse both the current leadership of BoC but also Central Bank governor Panicos Demetriades of lack of transparency.

The Church of Cyprus used to control a 5 per cent stake in the bank and wants to have a say as it has seen its deposits wiped out and revenues earned from dividends and interest shrivel to unprecedented amounts.

“Nobody knows why our shares are now worth one cent. I once asked Mr. Demetriades to explain it to me…and he couldn’t,” the Archbishop said yesterday.

During Q&A, one man in the audience – who identified himself as a stockbroker – laid into the Central Bank chief, without however naming him.

“This man is dangerous. He’s on a mission to dissolve the bank,” the man said, drawing a rapturous applause from the crowd.

The Archbishop, who was sitting on the panel, said nothing, but could not help nodding in assent.

Whether the hodgepodge of ordinary shareholders succeeds in forming a cohesive front remains to be seen. But it’s understood they have at least the moral backing of big land developers who are opposed to the mooted splitting of BoC into a retail operation and an asset management company.

Under a decision in March to ‘bail-in’ Cyprus’ two largest lenders, BoC and Laiki, losses were imposed on large savers in both banks. Laiki is being resolved, with all of its liabilities and some of its assets folded into BoC. The latter has been recapitalised by seizing large savers’ cash via a deposit-for-equity swap. Old shareholders were all but wiped out, with the bank’s creditors now forming the new shareholder base.


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