Cyprus Mail
Opinion Tales from the Coffeeshop

Tales from the Coffeeshop: A happy bunny no more

BoC chairman Christis Hassapis: the joyous smile he always presented to the cameras seems to have disappeared

By Patroclos

PANIC and dread gripped the head honchos of the Bank of Cyprus on Friday evening after receiving a letter sent to the bank by the Cyprus Securities and Exchange Commission (CySEC) just an hour before they were due to open the book with the offers for new capital.

The letter, signed by the vice-chairman of CySEC Andreas Andreou, claimed that the prospectus published by the bank, inviting offers for the new capital issue, was ‘misleading’ as it had not mentioned a minor irregularity that had been reported by the bank’s internal auditor, some three or four years earlier.

Such an assertion by CySEC, which supervises public companies, would have wrecked the bank’s attempt to raise one billion euro worth of new capital ahead of the stress tests. Interestingly, when the chairman of the Commission, Demetra Kalogirou was contacted to be asked why this joke of a problem had been brought up by Andreou, she said it was the first time she had heard about it.

Andreou had decided to try to wreck the capital issue on his own initiative, not deeming it necessary to inform his chairman about such an important decision. After several frantic phone calls the matter was finally resolved. Kalogirou sent a letter to the BoC telling it, essentially, to ignore her vice-chairman’s nonsensical claim.

There was a collective sigh of relief from the bank’s head honchos, but the chairman of the BoC board Christis Hassapis, who had been against the issue of new capital from the start, was a happy bunny no more. The joyous smile he always presented to the cameras must have been wiped from his face for good when the book of offers was finally opened. The issue was a big success, with total offers amounting to €1.8 billion, almost twice as much as the bank’s target.


IT SOUNDS weird that the chairman would be an unhappy bunny over a successful issue that secured the long-term future of the bank, but there is an explanation. The changes in the shareholding means that the end is nigh for Christis’ chairmanship.

Once all the procedures are completed and the shareholders approve the issue at an EGM, the next step would be to vote a new board. Many of the current directors, including the long-haired chairman, will be replaced by the new shareholders.

After almost a year as a business big-shot and A-list celebrity, Christis is facing the depressing prospect of returning to the academic obscurity he had been languishing in all his grown-up life, until the day the ETYK boss and the DISY leadership decided his lack of any banking experience made him the ideal man for the chairmanship of the country’s biggest bank.

Christis was opposed to the capital issue because he feared he would lose the chairmanship that made him a very important man. The Russian directors were also opposed but they had legitimate grounds, not guided by egotistical motives. They felt cheated as they had half their deposits seized for the recapitalisation of the bank, and the shares they were given in exchange for their money, would now be diluted. It is a bit like a second hair-cut for them.

Two very big Nicosia law offices that represent Russian money have also been working diligently to block the capital issue.



THE LETTER sent by Andreou was yet another attempt by the unhappy bunny and some of his fellow directors to block the capital issue. Our establishment had written, several weeks ago, about the board’s attempt to use the internal auditor’s report about a minor irregularity that occurred several years ago to prevent the procedure for the issue of new capital.

The directors decided to ask for a police investigation into the matter – if there was a police investigation the bank would not have been able to issue new capital – but they were stopped by Central Bank governor Chrystalla Georghadji who realised who they were up to and demanded that the file was handed over to her. She concluded that the issue was totally trivial and did not merit an investigation.

Georghadji had thwarted the directors’ devious plan but they did not give up. In a last ditch effort to stop the issue they went to the CySEC vice chairman Andreou, who is said to be on friendly terms with the unhappy bunny and would have been more sympathetic to their ignoble cause.

They did not report the case to chairman (I am not being sexist but this is the title given to her by the CySEC web-site) Demetra as she would not have agreed to declare the prospectus ‘misleading’ over the inconsequential matter the scheming directors had raised.

Andreou did them the favour, sending the letter an hour before the opening of the book, and if Demetra had not intervened Christis & Co would have achieved their objective.


YOU ALMOST have to admire Hassapis for the tenacity and guile he has used to hold on to the chairmanship of the B of C, for which he seemed inclined to even risk the future of the bank. You would not normally credit an academic with such hunger for power, status and money (his remuneration was 70 grand plus benefits).

Meanwhile the Russian shareholders are angry because they will not be given the option to maintain their shareholding by buying a corresponding amount of the new shares issued. It has been said that this is because the Central Bank wanted to reduce the influence of Russian plutocrats over the B of C.

There is a possibility that the dear old B of C board could become a Russia-US battleground, as there was significant interest in the capital issue from American investors. One US investment firm put in an offer of €400 million, an amount that would give it significant power in the bank if approved.

Of course the unhappy bunny and his Russian allies have not had their final word yet. An extraordinary general meeting of shareholders will have to approve the capital increase, but the board might refuse to call it.


STAYING on banking issues, everyone was surprised by the treatment of FBME by the Central Bank. Having taken over the bank’s management at the request of the FBME shareholders, after the release of a US Treasury Department report alleging the bank was involved in money laundering, it then decided to place it under the resolution authority.

The authority sent in an administrator who decided the bank would not engage in any of its activities for two days and then another two days. This meant that customers could not withdraw any money or make any payments. It was extremely drastic action, but it appears that Chrystalla has decided to close the bank’s Cyprus branch down.

She obviously gave in to pressure from the US which has been urging the Central Bank to take action against FBME for the last couple of years at least. Professor Panicos did nothing as governor – his PA was married to a former director of the bank and would never have allowed it – and was even considering granting FBME a licence, especially after it bought €200 million worth of short-term government bonds

But Chrystalla may have jumped the gun. The bank has 60 days to respond to the allegations contained in the Treasury Department’s report. A firm of big-shot lawyers is in discussions with the Department on behalf of the bank. What would the governor do, if the allegations in the US report turn out to be unfounded, having prevented the bank from carrying out its operations for weeks and ruining its business?


IN THE END the government and Troika reached a compromise over the foreclosures bill, but only after many days of inconclusive negotiations. Prez Nik took part in the negotiations on Thursday evening and a deal was finally struck the following day.

The deal was a personal victory for finance minister Harris Georgiades who argued the government’s case very convincingly and managed to persuade the Troika of the need to delay foreclosures on primary residences by a few months and to accept the need for an independent valuation of properties being sold off by the banks.

The details of the bill would be presented by Prez Nik this week, but the political parties were on the offensive yesterday morning, threatening not approve the bill and complaining because the premises of small businesses were not protected.

This may have come as music to the ears of Ethnarch Junior who has re-invented himself as the leader of an anti-memorandum front that apart from protecting the ordinary people that he cares so much about would also help his presidential ambitions. Earlier in the week he had a meeting with his soul mate Yiorkos Lillikas who announced the Alliance of Lillikas would join the anti-memorandum front and vote against the foreclosures bill.

I can’t help thinking that whenever our parties (except DISY) unite to defend the interests of the country and the people a disaster follows.


NEW GROUPS have been put together to fight against the foreclosures bill. One is imaginatively named Association for the Protection of the Primary Residence while another is called the Coalition of Small Businesses and the Self-Employed.

The leader of the latter is a certain Stavros Alambritis who has become a frequent guest on the morning radio shows and is always worth listening to. His coalition decided that it would fight the foreclosures bill, which Alambritis described as “an abortion”, by camping outside parliament with their families and putting pressure on deputies not “to betray the people”.

Its approval would be “high treason” he told Trito. “In 1974 we sold out our country to the Turks and now they want us to sell off our country to the Turko-Germans.”


THE TURKO-Turks were not very nice about Prez Nik after Thursday’s majestically pointless four-hour meeting he had with Dervis Eroglu.

In order to deflect attention away from Eroglu’s total negativity, which has been displayed very forcefully, since Ankara loosened his leash, his associates leaked information to the Turkish Cypriot press about Nik’s allegedly bad behavior at the meeting.

The prim and proper Turkish Cypriots were shocked because Nik supposedly banged his fist on the table, berated his advisors, scolded the UN, threw his spectacles on the table and stormed out of the meeting. The government spokesman denied there was any truth in the Turkish press reports, but why did he bother. There is nothing wrong with someone losing his temper when throwing the odd tantrum.

In fact we would all have been very proud and happy if Nik became mad enough to throw an ash-tray or a punch at Eroglu, instead of just banging his fist and glasses on the table. I bet his advisors would not have leaked that to the press.






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