Cyprus Mail
Business Cyprus

Court to rule Tuesday on BoC injunction

By George Psyllides

THE NICOSIA district court will announce its decision on Tuesday regarding an application for an injunction banning the administrator of the now defunct Laiki Bank from voting at a Bank of Cyprus (BoC) AGM, scheduled for September 10.

Lawyers acting on behalf of the Archbishopric and five other individuals and companies, asked the court on Friday to issue an injunction excluding the 18 per cent from the vote.

The administrator controls 18 per cent of BoC’s shares, which essentially belong to so-called legacy creditors.

Kypros Chrysostomides, representing the plaintiffs, suggested the 18 per cent share was illegal, arguing that any decisions taken with their participation would also be illegal.

During the lengthy hearing, Chrysostomides, claimed that the participation of Laiki’s administrator would cause irreparable damage to the BoC if the board was elected illegally.

BoC lawyer Polys Polyviou argued that an injunction would not only be wrong but also illegal.

Polyviou said the court was neither a securities and exchange commission, nor the Central Bank – issuing an interim order was not within its jurisdiction.

The bank has yet to post its consolidated accounts.

Chrysostomides argues 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.

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 Church of Cyprus used to control a 5.0 per cent stake in the bank and wants to have a say.

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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