By George Psyllides
CLOSE to 300 old Bank of Cyprus shareholders have filed a request seeking a court order preventing a share capital increase before the “real” value of their shares was restored.
Numbering approximately 88,000, the bank’s old shareholders saw their shares’ value diminished to 1.0 per cent in March 2013 when the bank was restructured following a conversion of 47.5 per cent of uninsured deposits into equity, the absorption of failed Laiki bank and the selling off of the bank’s Greek operations to Piraeus bank.
The 285 shareholders want an injunction banning the increase in share capital before the value of their stock was restored to the level of March 15, 2013 or else suspend an extraordinary general meeting scheduled for the end of the month.
The shareholders also filed a lawsuit against the lender, the state, the Central Bank, and Laiki’s administrator
They want a court statement saying the composition of the shareholding is wrong due to the wrong calculations.
The court ordered the Bank of Cyprus, Laiki, and the administrator, to submit their objections by August 20 and scheduled a hearing two days later.
The move was expected after it had been announced at the end of July.
The EGM at the end of the month was called to approve a capital increase of about €1 billion pledged by foreign investors and the European Bank of Reconstruction and Development.
In an issuer comment, Moody’s ratings agency had said the bank’s successful completion of the first phase of its €1bn capital increase “is credit positive because it will improve the bank’s liquidity and funding position, strengthen depositor confidence and potentially open other funding options.”
Moody’s said the additional capital would help BoC pass the EBA stress tests and withstand losses stemming from the high level of NPLs, which hovered around 55 per cent
Meanwhile the bank’s dependence on Emergency Liquidity Assistance (ELA) recorded a further decrease to €8.68 billion in July from €8.78 billion the previous month, according to figures released by the Central Bank. In May, ELA amounted to €9.23 billion whereas in April it was €9.4 billion.