Cyprus Mail

Former top official warned BoC that public should know about capital shortfall

By Angelos Anastasiou

The Bank of Cyprus’ board of directors had been advised to inform the investing public of the spike in its capital shortfall from €200 million to about €480 million, former financial director Christis Hadjimitsis told the court on Monday.

Taking the stand as a prosecution witness in the trial of five former BoC top officials, Hadjimitsis said that he had duly informed the bank’s leadership of the lender’s capital needs in mid-2012, noting that, considering that the sale of insurance companies had fallen through, the board should have notified investors of the increase in its capital needs.

He added that his department had not recommended the issuance of a profit warning at the time, as this was a matter for the board of directors, and repeated his view that the public should have been made aware of the bank’s real capital needs.

He acknowledged that 2012 was a “very difficult year” for the economy, riddled with uncertainty that drove up projections.

He added that the BoC made “superhuman” efforts to cover its capital shortfalls, a matter it handled “seriously”.

In June, 2012, he noted, the lender was not far from covering its needs, and had it been granted a reasonable extension, it could have attained the target.

Hadjimitsis will be cross-examined on Tuesday.

Former BoC board chairmen Theodoros Aristodemou and Andreas Artemis, former CEOs Andreas Eliades and Yiannis Kypris, and former deputy CEO Yiannis Pehlivanides, as well as the bank itself, are facing charges of conspiracy to defraud and manipulate the market in connection with “not informing the public that the bank’s capital needs had substantially increased from the amount of €200 million that had been announced in May 2012”.

A second criminal case against the Bank of Cyprus and six former top officials, relating to the purchase of Greek bonds by the bank and its failure to inform shareholders of the risk involved, has been set for hearing next month.

Apart from the Bank of Cyprus, Artemi, Eliades, and Kypris, who are also defendants in the first trial, non-executive board members Yiorgos Georgiades, Costas Severis, and Costas Hadjipapas, have also been charged.

On Monday, February 15, the Nicosia district court is expected to refer the first criminal case against now-defunct Laiki Bank to the criminal court, also on charges of market manipulation in 2011.

In addition to the lender, accused are Efthimios Bouloutas, Marcos Foros, Neoclis Lyssandrou, and Panayiotis Kounnis.

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