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CYPRUS: Is Hellenic Bank CEO being pushed out?

31 August, 2014

The long-time chief executive of the Hellenic Bank, whose conservative policies may have saved the bank from a similar demise of the other lenders in Cyprus, announced his resignation on Monday in what analysts believe is an effort by new shareholders to have a greater say.


Makis Keravnos, CEO since September 2005, having previously served as Minister of Labour and Minister of Finance after the accession of Cyprus to the EU in May 2004, has on several occasions criticised the poor management of other banks that led to their being taken over by foreign investors.
In a heartfelt message to staff and shareholders, Keravnos said that Hellenic Bank overcame the economic crisis with the least possible impact.
“No depositor lost even a cent from the writedown of deposits [as imposed on other banks] and the Hellenic Bank maintained strong name, one that instills trust, which is why we managed to recapitalise with private investors’ funds,” he said.
“My decision is final,” Keravnos said, adding that “due to me decision I can no longer be present. The (bank’s) new management must actively and immediately take charge and participate actively from the start.” He explained that his withdrawal was mutually agreed and on amicable terms.
Keravnos added that due to the ongoing developments and challenges in the economy – stress tests, ECB’s supervisory role, new regulations – the bank is entering a new phase of revising its medium to long term strategic plans.
The bank said in a statement that the board has recruited the advisory firm Heidrick & Struggles to find suitable candiates for the job, suggesting that the new CEO will not necessarily be a local candidate.
Archbishop Chrysostomos II, head of the Church of Cyprus that has seen its stakes in both Hellenic and bigger lender Bank of Cyprus dwindle due to their rescue by local and foreign funds, on Sunday confirmed news of Keravnos’ resignation, exactly a year prior to the expiry of his current contract.
The Archbishop said he met with Keravnos on Saturday who informed him that he did not intend to renew his contract.
The church leader said that with the two investors now controlling about 45% of the bank – Third Point of New York and Wargaming.net, the Cyprus-based online virtual battle platform controlled by Belarus investors – have the final say, much to his previous objections to the arrival of such investors who displaced the Church’s former control of 25% in the bank.
But this was considered a necessity as local investors were unable to prop up the bank’s capital due to the economic crisis that followed last year’s bailout by the Troika of international lenders.
Asked if Keravnos was being forced to resign, the Archbishop said “they (Third Point and Wargaming) have the majority and they control the bank.”
Fuelling the controversy, the Archbishop was quoted as saying: “The difference between us who used to have the majority in the Hellenic Bank and the foreigners who have the majority today is that we have always tried to serve the people and we never sought to put the profits into the coffers of the Church” and that the aim of the foreigners “is to pocket the profits themselves.”
He added that as soon as the bank recovers and the stock price goes up, the investors will sell their shares and leave.
In May, Hellenic Bank shareholders had approved the appointment of a new board, including the first female chairman of 40-year-old bank, Irena Georgiadou, formerly Commissioner responsible for Public Sector Reform.
No elections were needed since the number of candidates was equal to the number of positions to the board, with news reports suggesting that the three major institutionals – online gaming company Wargaming.net, New York-based hedge fund Third Point and local investment company Demetra – as well as the Church of Cyprus, giving their nod of approval.
The other members elected to the board were Marinos Yiannopoulos, Vasos Komodromos, Ioannis Matsis, Marianna Pantelidou, Evripides Polycarpou, Giorgos Fereos, Andreas Haritou, Christodoulos Hadjistavris and David Bonnano.