Cyprus Mail
Cyprus

BoC financial director told to leave the room, court hears

Bank of Cyprus’ former financial director Christis Hadjimitsis told the court on Tuesday that he was asked to leave the room when he suggested that the board discuss whether a ‘profit warning’ should be issued in June 2012.

During cross-examination at the trial of five former top BoC officials, as well as the bank itself, accused of having conspired to manipulate the market by misleading investors as to the true extent of the lender’s capital shortfall in mid-2012, Hadjimitsis denied any discussions on manipulating or withholding information during that time.

Answering questions by defence lawyers, the former financial director said he believed that had the bank been granted a reasonable extension by regulators, perhaps six months, it could have attracted the required capital itself.

“Efforts to save the bank by covering the capital shortfall were great,” he told the court.

“Had we been granted a six-month extension, and left to operate alone, I believe we would have managed.”

Instead, the bank had to cover its capital shortfall by end-June, 2012.

Hadjimitsis recounted how interest by three suitors for BoC’s insurance companies – Nest, Reso and Metcalf – never materialised into an actual purchase, for different reasons.

Further attempts to sell the companies to local competitors also failed, and no bids were made by June 14.

According to the bank’s former financial boss, the board examined the issue of the bank’s shortfall in two separate sessions, on June 14 and 26.

In the second session, the board was told by Hadjimitsis that the actual capital shortfall was estimated at €500 million, far in excess of the €200 million the bank had previously announced.

Asked whether he recommended the issuance of a profit warning, Hadjimitsis said he had raised the issue for discussion in the June 26 board meeting, but was told that his presentation was over and asked to leave the room.

“I did not recommend that a profit warning be issued – I said there was an issue for discussion,” Hadjimitsis said.

When a defence attorney pointed out that there is no mention of a possible profit warning in the minutes of the session, the witness said he didn’t know why.

Former CEOs Andreas Eliades and Yiannis Kypris, former board chairmen Theodoros Aristodemou and Andreas Artemi, and former deputy CEO Yiannis Pehlivanidis, as well as the bank itself, are facing charges of conspiracy to manipulate investors by under-reporting its capital shortfall in 2012.

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