— Transition Chairman likely until May ’07
The Bank of Cyprus Pcl (BOC) board meeting on Thursday is likely to be a critical one as it will have to choose a new group chairman after Vassilis Rologis resigned last week.
Ironically, board members will also have to take a stance on a cooperation deal proposed by the Group’s largest shareholder, Piraeus Bank, whose failed takeover in July probably led to Rologis’ resignation.
The front-runners to replace Rologis include former BOC Governor Christos Panjaris and the ex-chairman of Alpha Bank Cyprus, Eleftherios Ioannou, while bank insiders do not rule out the possibility of a third candidate entering the race at the last minute.
It is believed that the new Chairman will be temporary until May 2007 when the shareholders’ Annual General Meeting will take place, paving the way for the election of a new chairman.
Analysts however, agree that whoever is elected chairman will need the blessing of the Central Bank, which has spearheaded the recent board changes at BOC.
The statement by Rologis that he is “resigning from the post in order not to hinder the growth of the BOC Group” is seen by some as confirmation of the open conflict between Rologis and Central Bank Governor Christodoulos Christodoulou.
The Governor has often been mentioned as a candidate for the post of BOC Chairman, but any such decision would probably have to wait until Christodoulou completes his term at the Central Bank some time next year.
“The new person (whoever he is) should enjoy the trust of the Central Bank, otherwise there will be problems with how quickly BOC secures regulatory permission for expansion abroad,” a well informed source told the Financial Mirror.
Both Panjaris and Ioannou do not appear to face any problems with the Central Bank, leaving the board to make the final decision.
The BOC Board will probably also decide to appoint new members to fill the two vacant positions following previous resignations under Central Bank pressure. The most likely candidates are from the bank’s executive — Charilaos Stavrakis and Yiannis Kypri likely to join BOC CEO Andreas Eliades who was appointed to the board earlier this year. Such a selection will be in line with Central Bank directives urging banks to appoint at least two executive officers to their boards.
— Piraeus
The BOC board meeting on Thursday will also deal with how to respond to requests for cooperation from the bank’s single largest shareholder, Piraeus Bank, which controls a 8.2% stake.
BOC insiders insist that a previous statement in July when the Piraeus stake and proposals for cooperation were described as “not welcome and not in the best interests of BOC shareholders” is likely to change to “lets start from fresh and discuss everything.”
The recent rally in the BOC share price may be seen as confirmation by investors anticipating a change in strategy by the BOC board to discuss the various options leading to some kind of cooperation between the two banks, not excluding a merger of equals through a combined share and cash offering.
In the meantime, the new purchases of BOC shares by foreign funds are seen as a further vote of confidence in the bank’s management in delivering the promised results. Full year results are forecast to show a net profit of CYP 160 mln.
More interest in the bank’s shares may emerge following a major investor conference in London organized by ATHEX, where BOC will participate and make a presentation. The current level of foreign investors in the bank’s share capital is seen around 22% including the 8.2% stake held by Piraeus.
