Cyprus Mail

‘Pay hikes and fancy cars’ at legacy-Laiki subsidiary

By Staff Reporter

TOP honchos at the Investment Bank of Greece (IBG), a subsidiary of legacy Laiki, are wasting bailed-in depositors money by handing themselves pay hikes and buying fancy cars, DIKO MP Nicholas Papadopoulos alleged on Monday.

Citing his own information concerning alleged mismanagement of funds at IBG, Papadopoulos called on the Central Bank of Cyprus to investigate.

“Our own information reveals that directors at IBG have decided on their own to give pay rises to members of the board, while some managers decided to buy brand-new Lexus cars, all this with the money of Cypriot depositors [in Laiki bank] who were bailed-in in March 2013,” Papadopoulos said after a session of the House finance committee.

The central bank acts as the sole bank resolution authority on the island. Legacy Laiki is currently undergoing resolution, and its administrator is appointed by, and answerable to, the central bank.

The administrator has been tasked with selling off whatever assets the folded bank has; any proceeds would presumably go toward compensating the failed lender’s unsecured depositors, who received nominal equity for bailing-in the bank with their cash in 2013.

IBG, based in Athens, is an investment and brokerage services firm. It is not clear whether IBG, in which legacy Laiki is the majority shareholder, will likewise be wound down and sold off along with Laiki’s other assets.

According to recent reports, legacy Laiki’s administrator is close to launching a call for tender where interested investors would bid for the lender’s remaining assets and operations (in Malta, Serbia, Greece).

IBG is engaged in the process, offering investment and financial advice to the central bank regarding the prospective sale of legacy Laiki’s assets.

DIKO’s Papadopoulos seemed to be hinting that IBG’s bankers were cleaning up before legacy Laiki’s assets are sold off.

His claims drew an indignant response from Chris Pavlou, the administrator of legacy Laiki, and non-executive board chairman at IBG.

Pavlou took umbrage at the allegations of mismanagement, which he called completely unfounded.

Hitting back, he in turn revealed to Kathimerini that in the past he had sacked top IBG officers who were demanding “millions” to stay with the bank.

These are the same persons who today are circulating salacious rumours, he added.

IBG itself released a statement later in the day, likewise denying the allegations of funny business.

Countering, the firm attributed ulterior motives to Papadopoulos’ claims. It said such allegations were evidently intended to hurt the firm’s credibility and goodwill value, “quite possibly so that the company can be sold fast and on the cheap.”

In the interests of disclosure, the bank said, last August the legacy Laiki administrator approved a €100 salary increase for the firm’s three non-executive directors as they attended several board committees.

The board chairman’s salary was the same since he took the job, while the CEO’s salary came to €8,750 gross a month.

The bank said it had purchased a single Lexus in 2013. The six-year-old second-hand car was bought from a wholly-owned subsidiary of legacy Laiki for €25,000.

The transaction actually generated savings for IBG, since previously the company had been using another car, on a €10,000 lease per year on a five-year contract.

The Central Bank of Cyprus had been furnished with all this information, IBG said.


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