CYPRUS: BOCY sets AGM for Nov. 20 – CB green light to Wilbur Ross

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The Bank of Cyprus board decided on Tuesday to call for a shareholders’ meeting within 60 days, when US-based investor Wilbur Ross is expected to be elected to the board, representing funds that now control about 19% of the bank.

The bank said that a general meeting of its shareholders will take place on November 20, but did not add any further details, such as when the present board would step down.
Central Bank of Cyprus Governor Chrystall Yiorkadji sent a stern letter to the board on Monday directing them to resign and seek re-election, if they wish, at a shareholders’ meeting after the latest company restructuring.
The board had initially asked the centralbanker to vet billionaire Ross, who, together with other investors is pumping 400 mln euros into the island’s biggest lender as part of the 1 bln recapitalisation approved last month.
Yiorkadji reportedly replied that instead of adding Ross as the 14th member to the current 13-strong board, that they should all resign and seek re-election at an upcoming shareholders’ meeting.
It is unclear if the European Bank for Reconstruction and Development (EBRD) will also seek a board representation, to ensure that its investment of 120 mln euros is in check.
The centralbanker also warned the board to refrain from taking any executive decision that would impair the bank’s activities or burden a future management with unnecessary responsibilities.
In any case, the current board still has to approve the final part of its recapitalisation plan, to include 100 mln euros worth of shares offered to retail and old investors at 24c each, as was the case with institutional investors, with the total recapitalisation adding up to 1.1 bln. Once this is completed, the bank's adjusted share register will determine the new ownership and the stock will be ready to resume trading on the Cyprus Stock Exchange.
Shareholders controlling more than the 5% threshold include the ‘Legacy Laiki’ of the dissolved Laiki Popular Bank at 9.6%, two funds introduced by Ross – Renova Group with 5.46% and TD Asset Management with 5.23% – and the European Bank for Reconstruction and Development, with a holding of 5,021%.
It is also expected that the November meeting will elect a new board, but it is not clear which of the present directors will seek re-election.
The recapitalisation came about from the issue, initially by private placement to strategic investors, of 4.17 bln new shares at 24c each, the same price offered to all three categories of new, existing and old shareholders. As a result, the bank’s issued share capital now comprises 8.9 bln ordinary shares with a nominal value of 10c each.
In statements after the last shareholders’ meeting at the end of August, when the bank announced a total of EUR 81 mln in post-tax profits for the first half (Q1: 31 mln), CEO John Hourican had said that approval of the capital increase would boost the bank’s liquidity ratios far beyond the requirements of the European Banking Authority’s stress-test scenarios.
The Group’s capital position was strengthened with Core Equity Tier 1 ratio increased from 10.5% in end-December to 11.3% as at June 30. Combined with last month’s decision on the EUR 1 bln capital increase, the bank’s Core Equity Tier 1 ratio is now expected to hover at 15.6% (transitional basis) and 15.1% (fully-loaded basis) making it “one of the best capitalised banks in Europe,” the CEO had declared.