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After months of gloomy trades, the Cyprus Stock Exchange has enjoyed a rebound in investor activity, with the General Index rising about 7.5% on Wednesday to 122.47 points, primarily driven by second biggest lender Hellenic Bank’s success in finding major investors last Friday.
HB shares enjoyed a three-day rally closing on Wednesday at 9.7c, up from 6.8c on Monday and 8.1c on Tuesday. Total volume for the three days reached 959,000 euros with Hellenic accounting for nearly 60% of that.
Thursday continued to see a rally, with HB shares trading at closer to 11.6c by noon, up 19% from the previous day, and a healthy volume of 445,000 euros, compared to a market activity of 560,000 euros.
New York-based hedge fund Third Point LLC, online gaming developer Wargaming.net and local investment house Demetra together pumped 100 mln euros by buying shares, bonds and rights that remained unexercised after the bank's 294 mln euro issue to meet European liquidity rules.
This gave the bank a capital surplus of some 60 mln euros and pushed the stock price to levels last seen in July, at the height of the banking and financial crisis that gripped Cyprus.
The Cyprus Stock Exchange had suspended the Hellenic Bank stock last week as investors were sought to raise the 36 mln euro shortfall in the recapitalisation plan demanded by the Troika of international lenders that bailed out Cyprus.
With the stock price ranging from 4.7 to 5.7 cents in October, the share shot up in value and volume towards the end of October on rumours of potential investors.
The stock resumed trading on the CSE board on Monday with a completely revised shareholder base, as Third Point and Wargaming now each control a 30% stake and Demetra 15%. With the government controlling Demetra’s biggest shareholder, the Cooperative credit institutions, the state has indirectly become a major shareholder in Hellenic, to the tune of about 5%.
The Church of Cyprus, that controlled about 25% of the bank’s shares prior to the recap, did not fully subscribe to the recent bond and rights conversion aimed to prop up Hellenic’s Core Tier 1 ratio closer to 9.0%. Now it's stake has been diluted to a quarter, closer to 7%.
Hellenic Bank shares had been trading just above 18.5c a year ago, gradually dipping until March when the Eurogroup of finance ministers linked a Cyprus rescue package with a 4.8 bln euro bail-in by own funds at the biggest lender Bank of Cyprus sending HB plunging down with the rest of the CSE stocks.
Bank of Cyprus shed some 1300 jobs and cut half of its branch network while continuing with the group’s restructuring that includes offloading overseas assets and hiring a new CEO, former RBS investment chief John Hourican.
The bank’s stock, BOCY, is expected to resume trading at the end of next January or early February, when the consolidated 9-month results for 2013 are published, including the impact from absorbing all the operations of now defunct Popular Laiki Bank.
