Cyprus Mail
OpinionOur View

Our View: Foreign control of BoC is its best hope

Josef Ackermann

IN ONE of the interviews he gave in the last few days, Wilbur Ross who controls the biggest chunk of Bank of Cyprus shares, said that “investing in the biggest bank is like buying preference shares in the Cyprus economy”. To do this, he explained, “we had to be satisfied that there were good prospects in tourism and business services which are the main power engines of the economy.”

The fact that his company Tyrus Capital have nominated a top banker – Josef Ackermann, former CEO at Deutsche Bank – for the chairmanship of the Bank of Cyprus was “another sign of proof of the confidence of international investors in the prospects of the country and, particularly, in the banking sector,” said Ross. Nobody could dismiss these as platitudes as Ross had put his money – 400 million euros of it – where his mouth is. A billionaire financier invests this amount of money in a business only if he believes there will be a handsome return in the not too distant future; there is always some risk involved.

Ross’ investment, part of the one billion euro capital that was raised by the Bank of Cyprus, was the biggest vote of confidence in the prospects of the Cyprus economy and banking sector we could have wished for. No Cypriot has shown such faith in the country’s future, so it sounds mindlessly petty – if not blatantly xenophobic – when our all-knowing politicians complain that our biggest bank is being taken over by foreigners, interested in making a quick profit, with no regard for the interests of the country. Should we be complaining if the bank’s shares appreciate and give investors a quick profit?

DIKO chief and House finance committee chairman Nicolas Papadopoulos saw things differently. He lashed out against the government on Tuesday, the day after the new shareholders announced the candidates they were proposing for election to the BoC board, for allegedly engineering the shake-up at the bank. He had identified a heinous plot by the government to take control of the bank by ensuring the bank did not have adequate capital. It was a nonsensical argument. How would the government have control of a bank if the main shareholders are foreign investors, the majority of the board are foreign and the main decision-makers – CEO and chairman – are foreign?

Papadopoulos’ real gripe, although he was too embarrassed to say it, was that the political parties would lose their control of the bank. The board elected in September 2013 was a collection of party and union appointees who ran the bank as if it were a semi-governmental organisation. They often followed party diktats that were not in the best interests of the bank and openly undermined the foreign CEO they had hired when he refused to play the political game; they tried to employ a deputy CEO to bring him in line, but eventually abandoned the idea.

These same party-appointed directors did everything in their power to block the CEO’s plan to raise capital, which had the full support of the Central Bank as it would have significantly strengthened the bank. They went as far as to report the BoC to the Securities and Exchange Commission, on the day the book of offers was to be opened for publishing an allegedly misleading prospectus. The party appointees would rather have seen the bank sink than agree to a capital issue that would force them to surrender their board seats, something that, for any sensible person, made them unfit to be directors.

There will be a much healthier state of affairs at the bank once the new shareholders elect their candidates to the board at the November 20 AGM. It this will put an end to the rampant, political interference – by government and parties – the special treatment of big businesses with big NPLs and the easy access to credit for wealthy businessmen. This is probably what the politicians fear most but for the economy it will be a positive development. The country needs its biggest bank to be run by people with rich banking experience, proven track records, no links to the politicians and whose objectives are sound fundamentals and good profitability.

There is no guarantee the foreigners will be successful, but the prospects of the BoC becoming the driving force of the economy once again will be given a big boost once they take charge.



Related Posts

Another fine mess they’ve gotten us into

CM Guest Columnist

Inflation, wages and monetary policy

CM Guest Columnist

Our View: Camera shy candidates should expect to get called out by rivals

CM: Our View

Our View: Courts must lead the way in punishing corruption  

CM: Our View

Our View: Had there been proper check of Savannah cat by authorities?

CM: Our View

Eight years of solid companionship gone in a flash

Colette NiReamonn Ioannidou


Comments are closed.