Cyprus Mail

Big day looms for BoC

By Elias Hazou

BANK OF Cyprus (BoC) shareholders is set to elect a new board of directors on Tuesday after the beleaguered lender’s exit from administration.

The bank’s annual general meeting will take place at Nicosia’s ‘Filoxenia’ conference centre at 4pm. Three halls with a capacity for 1,000 people have been allocated for the event.

On registration, shareholders will be given a voting slip. According to the procedure, they can vote for any (or all) of the 49 candidates.

After the ballot count, the panel – consisting of the interim board – will announce the new board of directors.

The BoC’s new directors will subsequently be vetted by the banking regulator – the Central Bank – to determine whether they are ‘fit and proper’ for the job.

Following BoC’s recapitalisation via the bailing-in of depositors, the bank’s new shareholder base has shaped up as follows: 81.4 per cent is held by about 21,000 shareholders arising from the conversion of deposits to equity; 0,5 per cent is held by about 88,000 shareholders arising from the conversion of shares and debt securities issued as of March 29, 2013 (the ‘old’ shareholders); and 18.1 per cent is held by ‘legacy’ Laiki creditors.

Laiki creditors are the only stakeholders owning more than 5 per cent of the bank’s stock.

More likely than not, Tuesday’s AGM is set to be a stormy affair after what has transpired in recent weeks.

Before the recent change in the bank resolution law, the resolution authority comprised solely of the Central Bank. Under that previous arrangement, the proxy for the legacy Laiki creditors would have gone to the administrator of Laiki, who was appointed by the Central Bank chief.

But the law was modified, broadening the resolution authority so that it now consists of a trio comprising the Central Bank, the finance ministry and the Securities and Exchange Commission.

And last Friday the new resolution authority took a decision (by majority) to give the permanent secretary of the finance ministry a proxy to represent the 18 per cent of legacy Laiki creditors.

The situation – which smacks of a power play between the government and the Central Bank – has not gone unnoticed by Cyprus’ international lenders.

As it stands, the state – via the creditors of Laiki, still undergoing resolution – now has a direct say in the bank’s business despite the fact it did not bail out the lender.

The troika of international creditors has reportedly written to both the finance ministry and the resolution authority warning against government meddling in the bank’s affairs. The troika also reportedly hinted that it would monitor the situation and take it into account in its next review of Cyprus’ bailout programme.

Meanwhile, in another departure from norms, the AGM is convening without the prior publication of the bank’s latest consolidated accounts. Instead, only the bank’s balance sheet for Q4 2012 will be disclosed to shareholders today.

BoC’s new leadership is tasked with placing the lender on a solid footing. A key decision it will be called upon to make is whether or not to split the lender into two entities – a retail operation and an asset management operation.


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