The Central Bank of Cyprus and its Governor Panicos Demetriades have come under harsh criticism from political parties for the delay to approve two of the new board members elected by shareholders last Tuesday.
The central bank had rejected two members, one of six Russians elected to the board by lawyers and proxies, and Adonis Papaconstantinou, representing the “legacy Laiki” depositors who now control 18% of the shareholding of Bank of Cyprus.
The central bank has informed the two that they have a week to respond with additional information that would justify their approval.
“The supervision obligation is limited to the evaluation of the fitness and properness of the elected Board members and not all the candidates,” a central bank announcement said.
It also said it will not proceed with any announcements on the result of the evaluation and will notify Bank of Cyprus upon the completion of the evaluation process.
The six new Russian board members are Anshakova Anjelica (proposed by the law firm Scordis, Papapetrou & Co.), Chichikashvili Dmitry (Scordis, Papapetrou & Co Holdings), Kurazov Erishkan (Christodoulos Vassiliades & Co LLC), Lojevsky Igor (Yiorgos Tsielepis), Smetanin Anton (Christodoulos Vassiliades & Co LLC) and Strzhalkovskiy Vladimir (Bolestone Trading Ltd.). The latter was also chosen as the new vice chairman at an emergency board meeting that followed the shareholders’ meeting.
Bank of Cyprus, that was forced to absorb the troubled second largest lender Laiki Popular, was rescued using about 8 bln euros in own-funds from depositors as a “bail-in” as part of a greater 10 bln package for bankrupt Cyprus. The bank only exited the resolution process in July, after the central bank sacked the previous board and CEO and imposed harsh capital controls, bringing the economy to its knees.
Interim board members, bar one, failed to get re-elected by shareholders, some of whom were angry why their previous stake in Bank of Cyprus was diluted to just under 1%. Laiki Legacy and depositors-turned-shareholders control the rest, with the Ministry of Finance as part of the resolution authority having a say in the board elections.
The chances of interim CEO Christos Sorotos, an international banker who was head-hunted to restructure the bank, returning seem slimmer by the day as the new board will have to approve the restructuring plan proposed by consultants McKinsey and decide whether to recall Sorotos or go through the gruelling process of finding a new CEO.
The Bank of Cyprus, the primary driver of the Cyprus Stock Exchange, is not expected to resume trading until the end of October.
