Laiki Bank Group is planning to tap the local capital markets in search of capital in an attempt to boost its Tier 1 capital, which is needed to finance its rapid expansion drive abroad.
Laiki Chairman & Chief Executive Kikis Lazarides told shareholders during his AGM address that the Bank will very soon make an approach to shareholders asking for capital, probably through a rights issue in order to finance the expansion drive abroad.
“Our expansion drive abroad is proceeding according to plan,” said Lazarides, adding that new capital is needed to back such an expansion.
According to the audited accounts of 2004, the Bank’s Tier 1 capital ratio was 8.7%, which although well above the Central Bank minimum requirements, it needs to be strengthened further.
Lazarides would not be drawn into speculating the exact period when such a rights issue will be held, but led many to understand that the issue may be held ahead of the planned CYP 80-100 mln rights issue that Bank of Cyprus plans to hold by the end of the year.
Laiki needs Tier 1 as well as a strong Tier 2 capital – which at the end of last year was 12.7% — to partly help sustain the expansion plan in Greece, where the branch network will be increased to 60 by the end of next year from 48 now.
The Bank also has ambitious plans to expand its loan portfolio following passage of the new Leasing law, while emphasis will remain on expanding the housing loans.
NO NONSENSE
Kikis Lazarides also managed to quickly show to everybody just who was the boss during the AGM, when he swiftly dashed an attempt by some shareholders to criticise him regarding past comments, the poor performance of the share price and bad corporate governance.
His first reply to a question of poor performance was to tell the investor to “change your investment, if you are not happy with our performance.”
Lazarides insisted that Laiki’s performance in 2004 was exceptional and should be recognised by shareholders since the Bank managed to boost net profits by 120%, while in the first quarter of 2005, profits were up by 42.5%.
“If you are not happy with such a performance, then you should shift out.”
On charges that he had previously misled investors into buying the Bank’s shares, Lazarides countered that his remarks had been quoted out of context, adding that he had repeatedly warned investors to be careful.
On charges that margin account investors were being harassed by the Bank, Lazarides said that the Bank had been particularly sensitive to people with acute problems, but insisted that the Bank had every right to collect money from people who could afford to settle their obligations, but who were not doing so.
The only time when Lazarides was not convincing was when a shareholder demanded to know why the Board was not present on the podium instead of the Management team.
Despite calling on staff to make modest pay demands during the current round of wage negotiations, Lazarides proposed and passed a motion to hike the average director pay to CYP 5,000 a year from CYP 1,.000, whereas it was pointed out that Executive Board members do not earn additional money for attending the 6 meetings held over the year.
Additional fees of CYP 3,000 were approved for members of the audit committee and a further CYP 1,000 for participation in other committees.
