By Angelos Anastasiou
THE association of Bank of Cyprus’ old shareholders, who were wiped out during the bank’s recapitalisation through the conversion of uninsured deposits in March 2013, yesterday announced their intention to seek appropriate compensation in court.
During a news conference, the association’s chairman Archbishop Chrysostomos told reporters that his board will soon instruct its members to file class action suits against the Resolution Authority, seeking the restoration of their rights.
The issue is to be decided at the association’s general assembly on July 28.
A report on the rights of BoC’s old shareholders has already been prepared and its conclusions were presented by Chrysostomos.
“The bank has been subjected to harsh treatment at the expense of depositors, who were ‘haircut’ unnecessarily and unjustly, and bondholders and shareholders, who were wiped out,” he said.
According to Chrysostomos, examples of such “unacceptable actions” included the transfer of €9.1bn in Emergency Liquidity Assistance (ELA) from now-defunct Laiki bank after it was absorbed by BoC, and the sale of the Greek branches at a loss of €1.8bn.
The association said it will seek to have two demands met.
The first relates to the restoration of the value of old shareholders’ stock, by recognising a profit of €1.9bn in the BoC books, stemming from the merging of its operations with those of ex-Laiki. This profit, Chrysostomos said, was never recorded in the bank’s books “on instructions of the Resolution Authority and in violation of international accounting standards.”
“Had the bank recorded the accounting profit of €1.9bn, its capital would not have been negative, which would encumber the Resolution Authority in its arbitrary and completely illegal decisions,” he said.
The association suggested that bondholders are offered one-euro shares for each euro of bank bonds they held, the remainder to be used to partially restore old shareholders’ losses, which would mean a haircut of 30 per cent, instead of a 99 per cent write down imposed on them by the Resolution Authority.
The association’s second demand was the transfer of significant properties owned by the bank in the occupied areas, which is reflected in its books at zero value, in favour of the old shareholders.
“The injustice is obvious, but the will to restore justice is absent,” said Chrysostomos. “We will call on the public to prove its determination to restore justice through class-action lawsuits, involving President Anastasiades, and, unfortunately, if necessary through demonstrations, much as we would like to avoid these.”
Board member and legal consultant to the association Kypros Chrysostomides said that “there are prospects of legally reclaiming the rights of old shareholders.”
“The illegality demonstrated in the treatment of old shareholders, which blatantly disregarded constitutional and international law, as well as our own company law, will form the basis of our legal campaign,” he said.
Commenting on developments at the Bank of Cyprus, Archbishop Chrysostomos expressed his unease about the Central Bank’s decision to allow foreign investors in the bank’s capital increase, who will also set the share price, while excluding existing shareholders.
“When foreign investors have the right to set the share price, the Bank of Cyprus will be sold off,” he said.