Cyprus Mail

Papadopoulos accuses state of trying to take over BoC

DIKO's Nicolas Papadopoulos

By Elias Hazou

DIKO leader Nicholas Papadopoulos claims the government has concocted and executed an elaborate scheme to oust most of the current board of directors at the Bank of Cyprus (BoC) to gain control over the lender.

Speaking on the state broadcaster on Tuesday, Papadopoulos seemed riled that, following the coming shakeup at BoC, almost all the bank’s board members are set to be replaced, save for people who are clients of President Anastasiades’ law firm.

Though he did not name names, he was understood to be alluding to Vladimir Strzhalkovskiy, current vice chairman of the BoC board, who was one among just two of current board members slated to stay on.

Earlier this week the new shareholders of BoC – following a €1b capital increase – announced a list of candidates ahead of November’s annual general meeting.

The list featured all new names, except for Strzhalkovskiy and Ioannis Zographakis, chairman of the BoC audit committee.
Strzhalkovskiy is believed to be a client of Nicos Chr. Anastasiades & Partners, a Limassol-based law firm founded by Anastasiades.

Papadopoulos cited this as evidence that the government as well as the ruling DISY party were trying to wrest control of the island’s largest bank.

By contrast, a number of old directors, representing pension funds which obtained equity in the bank after their deposits were bailed-in – are on their way out, he said.

“The government and DISY control the cooperatives and Hellenic Bank, and now want to control Bank of Cyprus.”

The cooperatives have been bailed out and have been nationalised. As for Papadopoulos’ claim that the government and DISY control Hellenic, he may have been referring to the appointment of Irena Georgiades – ex-public sector reform commissioner – as chairperson of the bank.

Moreover, Papadopoulos accused the administration of engineering the shakeup at BoC.

As a result of the €1b capital increase, foreign investors are now in charge at the bank. Papadopoulos noted that this would not be the case had the bank not required additional capital.

The need for additional capital arose, he went on to argue, precisely because the government failed to forcefully negotiate with the European Central Bank and EU banking authorities so as to limit the capital requirements as far as possible.

And he hinted that this omission was deliberate as part of a grand plot to change the status quo at BoC.

“Unfortunately, the government is pursuing the same policies as the previous governor of the Central Bank,” added Papadopoulos, evidently referring to former Central Bank chief Panicos Demetriades, who during his tenure was criticised for going along with what were perceived as inflated estimates of Cypriot banks’ capital needs.

Hellenic’s major shareholders are Wargaming Public Company Ltd and Third Point Offshore Master Fund LP (both foreign companies) with 30 per cent each, while Demetra Investments owns about 15 per cent.

At BoC, a number of local figures found their way onto the bank’s board last year when the shareholder structure came to be dominated by legacy Laiki – indirectly controlled by the state – pension funds and the banking employees union ETYK. It’s widely rumoured that some of the board members were political party appointees.

At least one board director there has been tied to DIKO’s Papadopoulos.

Speaking later in the day, DISY MP Marios Mavridis dismissed Papadopoulos’ allegations.

“The new major shareholders at Bank of Cyprus and Hellenic are foreigners, they are not Cypriots and thus do not represent local interests,” said Mavridis, noting that the new stockholders are the ones calling the shots.

“I don’t know how Mr. Papadopoulos came to these conclusions. But if he has any further remarks, he is welcome to come forward with them and we will look into it,” he added.

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