Hellenic Bank, the one-time conservative lender that escaped a painful bail-in by depositors and a government rescue, plans to restore trust and lure fresh customers, its new chief executive Bert Pijls told a banking conference on Thursday.
Pijls, who was picked by the bank’s new board representing local and foreign strategic investors, said that the results of the recent stress tests by the European Central Bank “further boost the efforts for the Cypriot banking system to regain depositors’ and investors’ confidence.”
The ECB capital stress tests found Hellenic to have a shortfall of some €105 mln in a ‘worst-case’ scenario, prompting management and shareholders alike to proceed with a fresh capital raise of some €220 mln by the end of the year.
“The capital buffers will improve the liquidity position of the banks, which in turn would normalize their funding conditions allowing them to eventually provide lower lending rates,” Pijls said, adding that managing the pressures on liquidity will also allow the abolition of the restrictions on transferring funds abroad, thus greatly helping restore the credibility of the system.
The bank’s own research team said in its quarterly report this week that “the assessment results show that the Cyprus banking system is returning to a healthy and strong basis and is ready to actively support the recovery of the Cypriot economy.”
Speaking at the 2nd Cyprus Banking Forum, the CEO numbered the most important requirements for restoring trust in the Cyprus banking system as being the Single Supervisory Mechanism in the Eurozone, restricting the increasing trend of problematic loans, maintaining capital adequacy to help restore trust in credit institutions and providing better customer service.
Pijls explained that “the adverse economic and banking conditions present an opportunity to correct the structural distortions that brought Cyprus to this point and will lead to the establishment of a tighter regulatory framework to base the restoration of confidence and trust of the Cypriot society and foreign investors in the Cypriot economy and its banking system.”
His first public appearance as chief executive of the bank comes hot on the heels of an announcement that the shares, already listed on the Cyprus Stock Exchange, may also be listed on the Athens Stock Exchange (ATHEX), possibly by the first quarter of the new year.
The bank had said in a statement on Wednesday that the dual listing aims “to enhance liquidity and marketability of its securities, provide access to a wider base of investors, and, enhance exposure and credibility.”
Hellenic Bank boasts of the fact it “has not been impacted by bail-in or bail-out measures, enjoying unparalleled liquidity without any dependence on the ELA (Emergency Liquidity Assistance) or any other form of dependence of the European Central Bank. Hellenic Bank enjoys high depositors’ confidence as well as strong support of its major private shareholders.”
The rights issue and the duel listing decisions, as well as a new aggressive approach to boost market share at home and abroad, has the full backing of its institutionals investors who initially pumped €100 mln at the begging of the year. Its main shareholders now are the New York-based hedge fund Third Point and gaming giant Wargaming.net, each with a 20.3% stake, and local investment fund Demetra with a 10.6% stake.
The Church of Cyprus, that at one time commanded a 25% share of the bank and called all the shots, has seen its stake dwindle to below 8%, with Archbishop Chrysostomos declaring last week that it will not partake in a future rights issue as it does not have the €16 mln need to subscribe to the issue and maintain its stake. On the contrary, he said the Church will be selling the rights received from issue decision and will use the money to fund other projects, both commercial and community-oriented.
The stock is currently lingering at 4c a share, near its recent year-low of 3.8c, but down from 14.5c at the start of the year.
