THE SHARE of the Bank of Cyprus, which had been suspended for the last 21 months, makes its official return to Athens and Cyprus stock exchanges today. The closing price on the last day it was traded, March 15, 2013, was just under 21 cents while this morning it will open at 24 cents.
Much has happened to the biggest bank of the island since March 2013. Bondholders, shareholders and depositors were bailed in, its operations in Greece were sold off overnight, it was merged with the insolvent Laiki Bank, inheriting the latter’s staff and a €9 billion ELA debt and, finally, it was taken over by foreign investors. The chairman of the board now is Swiss, the vice-chairman American and the CEO Irish while the main shareholder is a US investment fund.
This is no longer the Cypriot bank, the share of which was once considered the most attractive investment for the local population with cash to spare. Rather than keep money in the bank many Cypriots bought Bank of Cyprus shares, earning a respectable annual income before passing them on to their children. All these shareholders were wiped out by the bail-in when the nominal value of the share was reduced from one euro to €0.001.
But this was the only way to save the bank, which was on the brink of collapse in March of last year but was helped to survive thanks to the capital controls imposed by the Central Bank and the bail-in of its depositors. There were still serious doubts about its future, given the rising number of non-performing loans, but the decision of the new board, voted in September of last year, to hire John Hourican as CEO proved inspired, even though the directors fell out with him shortly afterwards.
Hourican pushed ahead with the new issue of capital, despite the opposition of his board which fought him every step of the way. But with the backing of the Central Bank governor and the government the issue was a success, allowing the bank to pass last October’s stress tests. The shareholding changed again as a result, the bailed-in depositors seeing their shareholding diluted and an American billionaire wresting control of the bank. But this was the only way for the bank to survive.
There is still much work to be done with NPLs at 50 per cent, but the share’s return to the stock exchange today indicates the bank is on the path to recovery. And if it does well, it may eventually regain the confidence of all the tens of thousands of shareholders who saw their savings wiped out last year.