Bank of Cyprus awaits Russia green-light

Bank of Cyprus Group expects to receive the final green-light from the Russian authorities within a month before proceeding to commence full banking operations in Russia, while at the same time rejecting any sort of merger talks with Marfin Popular Bank.

Christis Hadjimitsis, BOC Group Financial Controller made the Russia opening statement at the “Cyprus Day” investment seminar organised by the CSE in Athens yesterday. He stressed that the Russia expansion plan by Bank of Cyprus is based on the Group’s extensive Russian customer base, which is a good reason why BOC cannot and will not cooperate with Marfin and rejects the latter’s pleas to join forces outside of Cyprus, while remaining competitors in the local market.

“In addition to relying on our huge number of Russian enterprises already banking with Bank of Cyprus, we had to prepare detailed risk management and analysis reports, which will become null and void if we were to merge forces with another bank,” said Hadjimitsis.

He told Greek analysts at the Cyprus Day seminar that the reason why there was increased interest in Bank of Cyprus is because of the Group’s success in delivering the promised results. Bank of Cyprus is on track to lift net profit by EUR 100 mln in 2007 to EUR 415 mln.

Hadjimitsis echoed the official line of the Bank in dismissing the calls by Marfin to join forces. He ridiculed the notion that there would be synergies at home if the two giants were to combine operations, citing a promise made by Marfin to unions that there would be no layoffs. He also noted the added risk of having major corporate as well as retail clients defecting in the case of a merger, causing loss of revenue.

“I categorically state that the profit and cost reduction assumptions made by Marfin defending its call for a full merger are baseless since according to our calculations, there is zero saving from the merger of the two entities,” said Hadjimitsis.

He also cast doubt about the long term commitment of Marfin and its strongman Andreas Vgenopoulos citing multiple changes in his rhetoric. “Initially, Marfin made a bid seeking both Piraeus and BOC. Then it changed its mind and decided to buy the stake of Piraeus in BOC after promising that he would not disturb BOC for a year. At the AGM, Vgenopoulos changed course again and said he will approach BOC shareholders directly and submit a proposal at the Bank’s AGM seeking to merge the international operations and remain competitors at home,” said Hadjimitsis, adding that BOC shareholders are better off backing Management and the existing Board rather than risk everything and opt for no strategy.