BANKING: Bank of Cyprus ‘clawback’ ends as investors pump in €104 mln

The ‘clawback period’ for existing shareholders to subscribe to up to 20% of the 1 bln euros worth of new capital increase in Bank of Cyprus has ended with a total of 67 mln submitted, making the balance available to institutionals, according to news reports.

After making some 800 mln euros’ worth available to new investors at 24c a share, the clawback process, at the same price, allowed present shareholders to bid for up to 200 mln euros worth more, but with each application limited to no less than 100,000 euros, according to strict Central Bank rules.
This last requirement may have been the reason for a disappointing third of shareholders responding to the offer.
Already, the European Bank for Reconstruction and Development (EBRD) subscribed to 120 mln euros worth, part of the estimated 700 mln euros the EU’s development arm is expected to invest in Cyprus, leaving the balance for significant stakes in some of the state-owned assets that will be privatised over the next four years.
Another major investor group, headed by fund manager Wilbur Ross, has taken up a further 400 mln euros worth of the new capital, considered a major coup by the bank’s current management to attract strategic investors.
However, the whole process has been criticised by the Russian and Ukrainian new shareholders, who were found to control large chunks of the bank after their deposits were converted to equity during the bank’s bail-in process last year, while former shareholders, whose stake was diluted to less than 1% after the bail-in, have resorted to legal measures to reinstate their shareholding, or at least increase by at least tenfold.
The upcoming shareholders’ EGM on Thursday, August 28, will probably be a fiery one, similar to the first post-bail-in meeting last October, when furious shareholders demanded to know why their stakes were withered down and how come irresponsible past managers and board members were not sent to prison. This meeting will once again determine a new shareholder structure and the board will change for the umpteenth time.