Cyprus Mail
Business Cyprus

Laiki administrator changes mind, will stay on

Legacy Laiki administrator Chris Pavlou

By Angelos Anastasiou

In a surprise twist, Legacy Laiki Special Administrator Chris Pavlou, who tendered his resignation on Tuesday night, changed his mind within hours and today agreed to stay on until the end of the year, at which point administration of now-defunct Laiki Bank’s assets will be handed over to the pan-European Single Resolution Mechanism (SRM).

In a three-hour meeting with Central Bank officials, in their capacity as the members of the Resolution Authority, Pavlou explained that he had been expecting yet another six-month appointment, per the provisions of the Resolution Law.

Instead, he was offered a three-month extension to his contract, which expired on Tuesday, to coincide with the end of the year, at which point the transition of administration to the SRM will take place.

At first, Pavlou was dismissive to the idea of a shorter-term appointment, but appears to have had gone back on his decision following consultations with the Central Bank on Wednesday.

In a statement issued after the meeting, Pavlou said he has agreed to continue his work after “certain pending matters relating to the framework of the transfer of administration to the SRM on January 1st, 2016, were clarified to him”.

“I have decided to continue the work I have been assigned, per my appointment by the Resolution Authority, with the sole aim of promoting the interests of the Bank’s creditors,” Pavlou said.

Pavlou told the Cyprus Mail that he quit his post on Tuesday, saying he has had enough.

“I have resigned tonight,” he said. “I have had enough. I am sick and tired of this.”

A week before Pavlou’s contract expired, DIKO leader Nicolas Papadopoulos fired a series of mismanagement accusations against the administrator, including having bought a luxury car and approving a raise of €100 – to €600 – in the salaries of the board members of the Investment Bank of Greece (IBG).

IBG is a relatively small bank, formerly owned by Laiki and licensed to operate in Greece, which seems to be at the heart of Papadopoulos’ tirade.

Its entire loan portfolio was transferred to the Greek Piraeus Bank in the chaotic shuffle of March 2013, when the Greek operations of local banks were sold off to Piraeus to mitigate the risk of contagion to Greece.

Since then, IBG has operated mainly as a deposit-holding retail bank focusing on “commission income in order to avoid any credit risk and maintain its high capital adequacy and liquidity ratios”, with minimal risk exposure to speak of.

Meanwhile, a legislative proposal tabled at the House Finance committee would transfer the right to appoint a Special Administrator to former Laiki’s creditors, following a general meeting.

As soon as the courts ordered the meeting, the proposal stipulates, Legacy Laiki is automatically considered to have exited its resolution status.

It is thought the bill is aimed at averting the transfer of Legacy Laiki’s administration to the SRM as of January 1, 2016, while wresting control of its assets from Pavlou to preclude the sale of IBG.

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