Cyprus Mail

Aristodemou lost almost €77m in haircut, court hears

Former Bank of Cyprus (BoC) board chairman Theodoros Aristodemou said on Thursday he could not understand why he is on trial, denying all charges levelled against him.

In the trial before Nicosia criminal court, Aristodemou and four other former BoC officials, as well as the lender itself as a legal entity, face the main charge of market manipulation – failing to disclose the true status of the lender’s capital needs, which bank officials had repeatedly estimated at €200m in May 2012 before more than doubling their estimate a month later.

Aristodemou was elected non-executive chairman of the board in 2008, resigning in August 2012 for health reasons.

Much of the trial has focused on the bank’s annual general meeting (AGM) of June 19, 2012.

According to previous testimony heard in the trial, during meetings held in May and June 2012 between top BoC brass and the Central Bank of Cyprus (CBC), the former spoke of a €200m shortfall, not €400m.

In a letter to then-CBC governor Panicos Demetriades, dated June 20, 2012 – i.e. one day after its AGM – the bank raised its capital needs to approximately €400m.

Testifying in court, Aristodemou said that following the AGM, all his attention was focused on his ill health.

“I had no participation, was not kept informed, nor did I have any influence on the serious issue, that is, the efforts underway to cover the capital shortfall as set by the European Banking Authority so that the bank could avoid requesting state assistance,” he said.

At the end of 2012, Aristodemou said, he held BoC shares worth nearly €69 million, which were wiped out after the events of March 2013.

During his entire stint as chairman, but also up until the ‘bail-in’, he never sold a single share.

Overall, his personal losses from the haircut came to almost €77 million, he said.

According to Aristodemou, the European Banking Authority (EBA) had advised BoC since 2011 that it needed to come up with €1.560 billion by June 30, 2012 in order to recapitalise.

In remarks during the contentious June 19, 2012 AGM, Aristodemou’s said the BoC Group expected to be “in a position to cover the minimum core-capital ratio within a reasonable timeframe.”

These remarks were subsequently misconstrued, Aristodemou claimed, in a bid to show that he had conveyed a false picture of the bank’s financial situation.

In saying “a reasonable timeframe,” Aristodemou said, he was actually referring to December 31, 2012 – the deadline set by the national banking regulator on BoC for covering its capital adequacy ratio.

The capital adequacy ratio is the ratio of a bank’s capital to its risk.

Aristodemou insisted that his timeframe remarks did not refer to June 30, 2012 – the deadline set by the EBA for coming up with €1.56 billion.

The former BoC official also denied that at no time during the AGM’s Q&A did he state or imply that efforts to comply with the EBA’s instructions concerned raising €200 million.

According to Aristodemou, the €400 million in capital shortfall was not a definite, verifiable figure, but rather was one of many numbers floated at the time inside the bank, one of many possible scenarios.

As such, he was under no obligation to cite that figure to investors.

Besides, he added, at the time the bank was confident it could push through the sale of its insurance companies in June 2012, and that its capital shortfall would thus not exceed the estimated amount.

The trial continues with Aristodemou’s cross-examination on January 18.


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