Veteran banker Andreas Philippou has been recalled from retirement to take over as non-executive chairman of the nationalised Cyprus Popular Bank (Laiki), replacing former Finance Minister Michalis Sarris who suggested in his resignation letter that the communist-led government wanted him out just eight months into the job.
Sarris had been recruited last December to help revive the tarnished image of the island’s second largest lender due to its colossal exposure to Greek government bonds that in turn accumulated losses of nearly 2 bln euros after their writedown last year.
His appointment had been approved by the current government and the then-board, that has since been replaced by government appointees after the state agreed to bail out the bank and take an 88% stake in Laiki.
Sarris had stepped in following the raucous resignation of former chairman and major shareholder Andreas Vgenopoulos, who had clashed over regulatory issues with the former Central Bank governor Athanasios Orphanides, a critic of the government’s runaway public sector debt.
Press reports suggested at the time that Vgenopoulos enjoyed the backing of the communist administration, while Vgenopoulos’ name was recently mentioned in dealings with Pireaus Bank’s Michalis Sallas who has been exposed as having issued loans to relatives for the indirect purchase of stock options.
Sarris said that the current Central Bank governor, Panicos Demetriades, had asked for him to step down “as this was the desire of the government,” he was told.
Sarris has been blamed for the recent ill-fated rights issue at Laiki that prompted the bank to seek a state bailout. However, he may also have been an obstacle in choosing investors preferred by the government or to cover up loans to pro-administration organisations and sports clubs.
Philippou, 73, was among the new directors appointed to the Laiki board where the government has full control.
The bank is reported to have offered early-retirement packages to some 180 mid and high level executives, while it is also considering closing down about 65 branches in a cost-cutting effort.
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