Sheer determination by the board, management and staff of Bank of Cyprus to fight off a challenge by Marfin Popular Bank for its control, together with wide support from shareholders and with additional support from the regulatory authorities combined to force Marfin strongman Andreas Vgenopoulos to withdraw his bid to force Bank of Cyprus into a cooperation.
This triumph may have far–reaching consequences as it means that control of
The momentum to fight off the challenge by Vgenopoulos, who wanted to force the BOC management to enter into negotiations leading to a merger started when Bank of Cyprus delivered yet another record breaking set of first quarter results.
The exceptional results proved that the management team headed by Andreas Eliades was in a position to deliver a solid increase in profitability, through trusted and sustainable banking operations.
As Eliades noted during a recent speech, for the average shareholder, the most important thing is to know that the management can deliver the promised exceptional increases in profitability, give higher dividends and continue to expand operations, but without undue risk.
This is what Bank of Cyprus is currently doing, since in addition to maintaining very high profitability growth together with higher dividends, the bank is now spearheading an organic growth in the new markets of
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— Mobilised
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The fact that Eliades took charge of organizing Bank of Cyprus rank-and-file to fend off Vgenopoulos’ challenge played a crucial role in drumming up support for the “No†camp.
As Bank of Cyprus staff were mobilised to collect proxies even from the smallest of shareholders to fight off the Marfin challenge, senior Bank of Cyprus officials including Eliades, Charilaos Stavrakis and Yiannis Kypri headed abroad to garner support from foreign institutional investors, controlling 24% of the bank’s capital.
In two weeks of high profile meetings and massive ground support, thousand of proxies started pouring in from the 70.000-strong shareholders, the majority of whom seldom trade.
With more than two weeks to go before the June 6 Annual General Meeting where a showdown between Eliades and Vgenopoulos was to be expected, the latter realised that the game was over, at least in this round.
Following a meeting last Thursday at the offices of the Competition Commission, it was made clear to Vgenopoulos and senior Marfin staff that they had violated competition laws by buying a 8.19% stake in Bank of Cyprus without seeking prior permission of the Commission. The Competition Commission is also investigating whether Marfin intended to abuse its influence at the AGM, which is seldom attended by shareholders, and hence gain a competitive advantage, perhaps by gaining a board seat which could be used to get sensitive information. The bank now faces the possibility of fines.
The negative turn of events from the regulators possibly convinced Vgenopoulos to seek the mediation of the Archbishop Chyrsostomos II to save face and secure an honourable exit from a difficult situation.
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— No change in agenda
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The Bank of Cyprus board, meanwhile, convened Friday in a scheduled meeting and apart from the items which were on its agenda, also reviewed the public statements by Marfin Popular Bank about the withdrawal of the resolution that Marfin requested to be submitted to the BOC shareholders’ AGM to be held June 6.
So far, the Bank of Cyprus board has had no formal notification about the intentions of Marfin Popular Bank. As a result, the board will review the matter when and if it is formally notified by Marfin Popular Bank.
The board also noted the important decision of the Commission for the Protection of Competition to take the matter of concentration created by the acquisition of 8% of the share capital of Bank of Cyprus by Marfin Popular Bank to a full investigation, in accordance with the procedures stipulated in the relevant Law.
The board expressed its pleasure regarding its support from the large number of shareholders, institutional investors and the Church (as a major shareholder of the bank) regarding the Group’s strategic options.
This support seems to have forced the Managing Director of Marfin Popular Bank to change stance on the matter. The BOC board considers that the continuation of this support is important in order to give an end to the current condition of insecurity and disorientation of the banking system and has expressed its satisfaction about the continuing interest in the course of bank as shown by Archibishop Chrysostomos.
