* Battle heats up for board control, old vs. new shareholders *
The Bank of Cyprus saga does not seem to let up. With the dust at the island’s main lender just about starting to settle and the market anxiously waiting to see an effective new management that will steer the bank and the economy back to growth, a new storm is about to blow with old and new shareholders vying for a bigger stake.
The much-awaited consolidated accounts show a 2.39 bln euro discrepancy in funds that should have been credited to old shareholders, a glitch that could mean that pre-bail-in shareholders at Bank of Cyprus would see their stake revised from a diluted 1% to nearer 40%.
This would please a lot of the old shareholders who saw their stake taken over by legacy Laiki holders who were granted a 18% stake to compensate for their loss in the resolved Popular Laiki.
Legal expert Kypros Chrysostomides and lawyers from at least four other firms have been negotiating with the Central Bank, the government and other stakeholders to ensure that their clients are fairly represented and that ordinary shareholders have the final say in the bank’s future and not politicians. Some of the new shareholders who have come out of the 8 bln euro bail-in include Russian depositors, which the New York Times said that in their desperate attempt to push Russians away from Cyprus, the Eurogroup has effectively handed over a European systemic bank on a silver plate.
A stormy meeting is expected to take place at the Hilton Park at 6pm on Thursday where former BOCY shareholders will decide what to do next, chief among the options being to take measures to postpone the bank’s AGM on September 10, which was supposed to deal only with the appointment of new board members.
KEEN TO STAY ON
The existing board, appointed by the Central Bank, is keen to stay on, as is interim CEO Christos Sorotos who oversaw the rapid restructuring and staff reduction plan. But new directors are also in play, with one report naming Evgeny Nadorshin, and another Igor Lozevsky, a former Deutsche Bank executive. Provident funds also want to have a direct say in the running of the bank, with every interest group now coming forward to submit potential board members for election.
Even the Church of Cyprus, that used to control a 5% stake in the bank and is trying to cling on to its 25% shareholding in Hellenic Bank, wants to have a say as it has seen its deposits wiped out and revenues earned from dividends and interest shrivel to unprecedented amounts.
Already, the law firms representing BOCY shareholders have reportedly secured an interim order from the Supreme Court to postpone the AGM, while proposing names of candidates for the board should end by September 5.
In any case, 18 people will be elected to the new board, with Central Bank Governor Panicos Demetriades giving the final nod of approval.
The new share register has 110,000 shareholders, of whom about 9,000 are legal entities. Of these, 21,000 came about from the bail-in of unsecured deposits above 100,000 euros, who have seen their savings confiscated and compensated in about 45% worth of shares and the rest lock in new long-term deposits. Also, some 10,500 new shareholders are the result of the conversion of the high-risk bonds, while of the total about 21,000 shareholders are foreign, possibly as much as 50% of the share capital.
LEGAL EAGLES
The law firms of Christodoulos Vasiliades, Andreas Neocleous, Skordis & Papapetrou and Nicos Anastasiades, as well as the audit firm Costas Tsielepis, representing shareholders with more than 1.5%, say their clients, who held large deposits in the resolved Laiki Popular Bank, want to be represented on the new Bank of Cyprus board.
Laiki ‘legacy’ holders, representing an 18% stake in the recapitalised Bank of Cyprus, argue that Central Bank-appointed administrator Andri Antoniadou cannot vote or take decisions on behalf of the while block.
Meanwhile, former BOCY board member and chairman of the Cyprus Institute of Directors (IoD) Evdokimos Xenofontos wrote to the Central Bank Governor suggesting that proxies should be given to the uninsured depositors and other ‘bad’ Laiki creditors to enable them to directly vote for the new directors.
“The proxy-holders should be entitled to nominate some other person to present himself at the General Meeting and vote on their behalf,” Xenophontos said, adding that the 18% shareholding should not be exercised as a “block” vote, because that would mean that this stake could control the Bank of Cyprus at any general meeting.
Former Attorney General Alecos Markides, representing the remaining Laiki Legacy holders, SYKALA, said that it was possible to have a common body to act on behalf of all former Laiki depositors, while SYKALA president Adonis Papaconstantinou said the aim was to have a say in future decisions.
