By Elias Hazou
THE old shareholders of Bank of Cyprus (BoC) said yesterday they would oppose on principle today’s vote on raising the bank’s capital.
“We shall go there and vote against it,” Archbishop Chrysostomos, who heads an association of old BoC shareholders, said.
The bank is holding an extraordinary general meeting (EGM) of shareholders today to approve a capital increase of about €1.0bn pledged by foreign investors and the European Bank of Reconstruction and Development.
The bank’s old shareholders are opposed to the move as it would further dilute their shareholding.
“But I wish to be frank,” Chrysostomos added. “We know that we cannot muster more than 1.0 per cent of the votes [at the EGM]. Therefore, our position will be defeated, but what we want is for our voice and our protest to be heard, irrespective of whether we fail.”
The archbishop was speaking to reporters after a meeting between the old BoC shareholders and President Anastasiades.
There, the President apparently promised to set up a special committee – comprising representatives of the old shareholders, as well as from BoC, the Central Bank and the Securities and Exchange Commission – to examine ways of ‘partially’ restoring the original shares’ value held by the old stockholders.
“The authorities will be looking at the issue in detail, in order that the old shareholders may get some measure of justice,” Chrysostomos said.
“It would be utopian to believe we can recoup everything we lost,” he hastened to add.
Some 88,000 old BoC shareholders saw their shares’ value diminished to less than 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.
Earlier this week, the Nicosia district court rejected a request from the old shareholders seeking an order preventing a capital increase before the “real” value of their shares was restored.
The 285 shareholders wanted 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 the bank’s EGM.
They have meanwhile filed a related lawsuit – against BoC, the state, the Central Bank, and Laiki’s administrator – where they demand a court statement saying the composition of the current shareholding is wrong due to wrong calculations.
The lender’s former deputy chairman Evdokimos Xenophontos called on shareholders to reject the capital increase. He said any extra capital buffers could be injected by the government, either in the form of redeemable preference shares, or through the issue of ordinary shares with the parallel issue of warrants to existing shareholders entitling them to buy back from the government the shares they would be entitled to at pre-agreed prices.
Xenophontos added that the advantage of this move is that the control of the country’s main bank will not go to foreign hedge funds and the future prosperity of the economy will remain in the control of its people. Waiving the shareholders rights will also be reversible.