Cyprus Mail

Tales from the Coffeeshop: AKEL’s rather strange bank volte-face

BoC investor billionaire Wilbur Ross

By Patroclos

THE MOANING about the Bank of Cyprus falling into the hands of American ‘vultures’ that would engage in ruthless asset stripping, did not last as long as was expected because by Wednesday the parties and newspapers focused their attention on the foreclosures bill that was approved by cabinet on that day.

The anti-American papers were quick to point out that US hedge funds would take control of as much as 40 per cent of the bank’s shareholding, lamenting the fact that the Russian shareholders would be sidelined.

Much was also written about billionaire investor Wilbur Ross – labelled a ‘vulture’ by the US media – who specialised in taking over distressed companies, turning them round and then selling them for a big profit. Ross will control a large chunk of BoC shares and has already expressed an interest for seat on the board.

Nobody mentioned the positives. A one billion euro investment in a struggling bank is a big show of confidence in its future prospects, especially when the money has been put up by greedy American investors whose only concern is profit.

And the Yanks should know a few more things about how to turn a bank around than both the Russian uninsured depositors, who ended up with sizeable shareholdings and seats on the board as compensation for the seizure of their deposits, and the Cypriot directors appointed by the parties and bank employees’ union.

ARCHBISHOP Chrysostomos also felt obliged to impart his wisdom on the issue, especially now that he is the chairman of the association of old shareholders of the B of C that is threatening to take legal action against the government for leaving them with just one per cent of their shares.

When he is not offering spiritual guidance to his flock – he hardly ever does nowadays – Chrys works as a business and economics analyst for Trito radio show uttering his naïve theories for our benefit. He was particularly unhappy with the developments at the BoC which had gone from being a bank of the Cypriots to being one of the foreigners – first of the Russian and now of the Americans.

This was the result of the actions of some ‘achairefti’ (there is no exact English translation for this wonderful word, the closest being a ‘good-for-nothing individual’ and ‘loser’) running the bank and the mistakes of the Central Bank.

His astute economic analysis failed to mention what had happened to the Church’s bank – Hellenic – which fell into the hands of a Russian company and a US investment firm earlier this year. Some ‘achairefti’ ensured that from majority shareholder the Church became a minority shareholder in what is now not a very Hellenic bank.

DESPITE his efforts to prevent the new issue of capital, the chairman of the BoC Christis Hassapis was in good spirits – although not at happy bunny highs – after the board’s marathon session on Monday that decided to issue some four billion new ordinary shares and thus raise €1 billion.

“The fact that high calibre institutional investors were interested and participated successfully in this exercise is testament to their confidence in the bank and also in the economy of Cyprus,” he said after the meeting. “This successful placing will significantly strengthen the bank’s capital position and is essential step in the restructuring of the group.”

But if this is the case why had Hassapis and his fellow directors done everything they could to prevent it from happening? Why did they not want to “significantly strengthen the bank’s capital position” and only grudgingly went ahead with it, when the Central Bank governor threatened to sack all the members of the board?

The directors even tried to stop the issue that “will significantly strengthen the bank’s capital position” on the day the book of offers was to be opened by getting the Cyprus Securities and Exchange Commission vice-chairman to declare the prospectus ‘misleading’.

THE BOARD will have one last chance to block the capital issue and keep the capital position of the bank weak at the EGM scheduled for August 28. The increase in capital will have to be approved by 75 per cent of the shareholders and the board could urge them to vote against it.

Hassapis will be chairing the EGM, despite an attempt to have him replaced before then. At its last meeting the board of directors of the Central Bank discussed a proposal to axe him, but there was no consensus so it was put to the vote. He survived by one vote, so he could carry on being a happy bunny for a few more weeks.

Once the all-devouring American vultures fly in, however, Hassapis will have to vacate the chairman’s office, because Wilbur is unlikely to allow a union/party appointee and apprentice banker to have a big say in a bank in which he has invested hundreds of millions.

THE BANK-BASHING commies of AKEL do not hate all banks equally. For example, they seem to have a fondness for FBME and their party has issued two strongly worded announcements in the last 10 days criticising the Central Bank for the way it had treated the bank.

In its first announcement it asked five questions – perfectly legitimate – about the CBC’s decision to put the bank under the Resolution Authority while in the second announcement, issued a few days later by deputy parliamentary spokesman Stavros Evagorou, he asked why the questions had not been answered.

He said the party was waiting for governor Georghadji to arrange a meeting at which she would give answers to the comrades and provide documentation that justified her decisions. This touching communist sensitivity to the plight of FBME was never displayed when the former governor and party apparatchik Professor Panicos was screwing the Cypriot banks.

AKEL posed no questions and demanded no meetings with the then governor so he could provide documentation for his decisions that were designed to destroy the Cypriot banks.

THERE are several possible explanations for AKEL’s principled defence of FBME. First, the bank bought €250 million worth of short-term junk bonds issued by comrade Tof’s government when nobody else would touch them and agreed to roll over payment when funds were not available.

Second, the allegations against the bank were made by the Treasury Department of the hated US and any enemy of the US is a friend of the commies. Third, Akelite, former finance minister Kikis Kazamias is a consultant/director of the bank, even though he has been keeping a low profile. Fourth, the bank may have made a contribution to party coffers. And fifth…if there are any other explanations of how AKEL turned from bank-bashers to bank-lovers, we would love to hear them.

MEANWHILE, DISY chief Averof Neophytou has gone in the opposite direction and turned into a bank-basher. The week before last, out of the blue, he called a news conference which he devoted to slamming the banks for their extortionate interest rates and for having turned into debt-collection agencies that offered no help to the economy.

He was absolutely right in everything he said, but what had triggered this untypical outburst? Apparently, the party’s communications advisor organised focus group discussions to establish why, despite DISY’s very good showing in the European elections, the party leader’s approval rating was low.

According to the focus groups Averof was perceived as being on the side of the banks at a time when so many people were being shafted by them. He was also viewed as a defender of the interests of the big developers, so do not be surprised if he calls a news conference in the next few weeks to express his outrage about the NPLs of Aristo and Leptos.

PROFESSOR Panicos was back in the news recently, being quoted in a New York Times report about the bail-in and the role played by consulting firm PIMCO which he had chosen to estimate the capital needs of the banks.

The Professor used one of the lamest excuses imaginable to justify his decision not to inform the government about a Black Rock report that estimated the capital needs of the bank to be one billion euros lower than the PIMCO figure. The lower figure may have prevented the deposits hair-cut if it was cited by the government at the Eurogroup meeting.

However, the Professor chose not to tell the government of the Black Rock study “because he said that the issue was too technical for top officials to understand.” If it was too technical for the finance minister at the time – Michalis Sarris, formerly a long-serving World Bank official with plenty of technical knowledge – surely a prominent professor of finance like Panicos could have explained it to him.

AKEL has not yet issued a statement asking why Panicos suppressed the Black Rock study, probably because it did not affect FBME.

AFTER the publication of the NYT article, the professor issued a response to his favourite web-site Stockwatch, in which he repeated the standard AKEL propaganda about the collapse of the banking system. He said:“The triple merger of Laiki Bank, which was approved by the previous administration of the Central Bank in March 2011, while the Greek crisis was deepening, caused losses to Cyprus of many billions of euro.”

This is a blatant lie which Panicos never tires of repeating. The merger took place without Central Bank approval because such approval was not legally required. The Central Bank was simply notified of the court decision on the merger that required only the approval of the Registrar of Companies.

This was mentioned by the Alvarez & Marsal investigation into the banking collapse and also in a letter sent to the House Finance Committee by senior manager at the Central Bank, Yiangos Demetriou, last September, when Panicos was still governor.

The law must be too technical for top professors to understand.

OPPOSITION to the foreclosures bill is gathering momentum and every 10 people that get together seem to set up a group to defend primary residences while group leader is invited on the Trito radio show for an interview.

Last Friday it was the turn of the leader of the Movement Against Foreclosures to expound his views. His movement wants no foreclosures for three years. After three years, the economy would have recovered and borrowers would be in a position to repay their loans, he said.

The Archbishop is obviously not the only fruit-cake that expounds simpleton views on Trito.


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