CYPRUS: Hourican to stay on as BOCY CEO, new listing

Board Chairman Josef Ackermann told a shareholders’ meeting that Hourican, who had submitted his resignation earlier this year and was about to step down in summer, half-way through his contract, has agreed to a new contract.
“I have committed to continue to lead the team for another two years and I will do all I can to return our bank to value and strength,” the renewed CEO said.
Announcing the 9-month flat profits of €73 mln after tax, which Hourican termed as ‘moderate’, the Chairman and the CEO also said that now that stability has returned, the stock would seek listing on “more liquid, index-driven European stock exchanges.”
The board launched a search for a new CEO last April “and we have actually made substantial progress in this regard by identifying a short list of well qualified candidates. At the same time, however, we have been working on John to encourage him to reconsider his earlier decision to step down and to remain instead on board. We are delighted at the end that John and his family have agreed to do so,” Dr Ackermann said.
Praising the renewed CEO, who will stay on for a two year term with an option for one more year, the Chairman said “John has done a remarkable job in leading the bank over the past two years. He has literally put Bank of Cyprus on the global financial map and justifiably earned the recognition of “Banker of the Year” bestowed on him by the Euromoney Awards for Excellence for 2015. His achievements are numerous and impressive.
“In a nutshell, he has, in a short period of time, instilled self-confidence and motivated a rather discouraged staff, established rigorous and effective management structures, empowered a team of talented young executives to respond to the new challenges and implemented a demanding restructuring plan, establishing a new, dedicated loan restructuring and recovery division. He has also secured a very successful and very timely recapitalisation of the bank from foreign investors, made major strides in deleveraging non-core assets in other countries and sharpened the focus of the Bank’s core activities in Cyprus.”
Hourican is credited with locating the present mega shareholders, including billionaire venture capitalist Wilbur L. Ross, who pumped in €400 mln in early 2014, as well as the European Bank for Reconstruction and Development (EBRD) that added a further 120 mln, from among the €1 bln of fresh capital that was raised.
At the same time, the CEO’s two-pronged strategy had been to deleverage the bank from all its non-core assets, having disposed of all non-Cyprus holdings up until September, and improve the fundamentals by lowering staff and operating costs, while encouraging new depositors, reportedly attracting some 500 mln euros in the year to date. He was also adamant in paying down the ECB funding through the emergency liquidity assistance (ELA) programme, that has been reduced from €11.4 bln to €4.3 bln in two years.
The recent passage by parliament of a series of regulations, including the frameworks on insolvencies and foreclosures, that will allow the bank to recover some €12 bln of non-performing loans, as well as the latest bill allowing banks to sell off their bad loan portfolios to independent funds, is also expected to improve the bank’s operations and profitability.
However, the road ahead remains bumpy as Hourican has stirred a hornet’s nest by blaming politicians from meddling in banking affairs and delaying the set of new regulations, for which the bank’s CEO has drawn public criticism, which will not be the last.
Concluding his speech, Ackermann told shareholders that “the bank’s strategy will remain focused on serving the needs of our clients and achieving value for our shareholders, while also aiding the recovery of the Cypriot economy. The bank and the Cypriot economy are in the same boat and we need to work together with the whole Cypriot society.”
“Our immediate top priority remains the further enhancement of the quality of our assets through a steep reduction in the outstanding stock of NPLs and continued deleveraging of non-core assets,” he said.
“At the same time, we will focus on advancing the core activities of the bank through a broader range of financial products and services, better client-centred service, stepped up technological innovation, and enhanced operational efficiency. In addition, we will continue to explore options for the diversification of the bank’s funding sources and the potential listing of the bank on more liquid, index-driven European stock exchanges,” he concluded.
The last note was echoed by renewed CEO Hourican who told shareholders that “we intend to improve the liquidity and attractiveness of our stock by attracting more institutional investors in the equity. We are examining the possibility of listing the stock in a more liquid, index-driven, European stock exchange.”
“In March 2013 we suffered the indignity of being the only Bank and Eurozone Sovereign nation to bail in its unsecured depositors and impose debilitating capital controls. We lost the confidence of our customers, our investors, our staff and all stakeholders,” he said.
“Although we remain at war with economic circumstance, today the picture is much improved. We have significantly strengthened the bank’s ability to weather the storm. Its capital base stands at 15.6%. The balance sheet is less exposed to overseas shocks and significantly deleveraged. We have dramatically reduced our reliance on ELA and begun to rebuild our deposit franchise. We have stabilised and begun reducing delinquent exposure levels.”
Hourican warned, however, that many dangers remain.
“We must continue to battle all issues across the Group with the same intensity as before – we still have much to do in building value for our investors and a great bank for our customers and employees.
“We believe our long-term outlook is bright. We are confident in the group’s prospects and in our ability to deliver sustainable returns for our shareholders.”