By Stelios Orphanides
Bank of Cyprus shareholders were meeting in Nicosia on Thursday to elect a new board of directors which will represent the new shareholder structure, following the 1 billion euros capital increase in August.
Following the recent capital increase, US billionaire Wilbur Ross, who made profit from investing in, reorganising and selling its stake in Bank of Ireland, and the European Bank of Reconstruction and Development Bank belong to the lender’s shareholders.
The bank merged with failed Cyprus Popular Bank and seized nearly half of unsecure deposits in excess of 100,000 euros from its depositors to create new capital as part of Cyprus’s bailout terms agreed with international lenders in March 2013. It is now subjected to the European Central Bank’s single supervisory mechanism after it successfully completed the ECB’s asset quality review less than a month ago.
Former Deutsche Bank chairman Josef Ackermann who is nominated for chairman by Ross who is also running for board membership, will have to deal with the Cypriot lender’s non- performing ratio, which stood at 58 per cent at the end of June. The bank posted 2.1 billion euros in after tax losses last year, compared to 2.2 billion euros in losses in 2012, posted an after tax profit of 78 million euros in the first half of the year.
It is “great that politicians will not have as much influence in the biggest bank of the country as they did before and that supervision will be taking place from the ECB,” Alexander Michaelides who heads the department of finance at the Imperial College in London, said in an emailed interview yesterday.
“If politicians and independent officials up their game and learn something from the crisis that action is less costly than inaction and that they must be perceived, as well as be, without any conflicts of interest, then that would be even better news for the country,” Michaelides said and added that the presence of Ackermann, Ross and the EBRD in the bank is a “great positive signal that people with calibre have been convinced to participate”.