The Bank of Cyprus, the island’s premier lender that has turned around its finances since the economy collapsed over three years ago, aims to seek a listing on the London Stock Exchange and maintain its presence on the Cyprus Stock Exchange using a holding company structure.
The shares will no longer be traded on the Athens Stock Exchange, while the bank is hopeful it can secure a premium market listing in order to be included in the LSE indices and be positioned among a broader group of international peers.
“(The) listing on the London Stock Exchange marks another significant step in the bank’s transformation,” Chairman Dr. Josef Ackermann said in a statement.
“We believe that the bank, and its stakeholders, will benefit from the greater profile, liquidity and access to capital that a London listing offers. (It) will also enhance the Group’s ability, as the largest banking and financial services group in Cyprus, to play a key role in supporting the growth of the Cypriot economy.”
CEO John Hourican said that it should happen at some point in January, but the process started on Tuesday.
“Our objective is to be in the premium segment ultimately and to be eligible for inclusion in the FTSE indexes which gives basically a natural buying market for the shares and hopefully improves liquidity and improves the price momentum in the stock at a future date”, he said.
“Taking ourselves out of Athens is a very important step because we no longer have a Greek business and it doesn’t make sense for us, it is not a very liquid market, it is subject to capital controls and Cyprus has performed dramatically better and is my personal view that we should continue to disassociate ourselves from the Greek capital market”, he said.
The bank said in an announcement that the London listing is in line with the long-term strategic commitment to list on a major European stock exchange. It is expected to improve the liquidity of the bank’s stock, which will enhance the bank’s visibility and lead to a broader base of investors capable of supporting it in the long-term. This will further enhance the confidence of all stakeholders in the group.
This milestone follows the EUR 1 bln equity raising; the appointment of a new board led by Chairman Ackermann and deputy chairman Wilbur R. Ross, extensive deleveraging of non-core operations, increasing share in the home market, significant reductions in problem loans (down by EUR 4.23 bln since December 2013) and Emergency Liquidity Assistance (down by EUR 10.6 billion since April 2013 to EUR 0.8 billion as of today).
The bank’s announcemenmt added that it “continues to work towards a premium listing on the LSE, and intends to apply for a step up to the premium segment of the LSE at a future date, with the intention of becoming eligible for inclusion in the FTSE UK Index series. Work is ongoing and the standard listing is an intermediate step on this long-term path. In order to facilitate this process, a new holding company has been incorporated in Ireland, which is intended to become the new holding company of the Group.
After examining a number of potential jurisdictions, the bank said that it determined that an Irish incorporated holding company would be appropriate. Ireland is a FTSE eligible Eurozone country, has a common law legal system similar to that of Cyprus and is a commonly adopted jurisdiction for companies wishing to apply for a listing on the LSE. Bank of Cyprus Holdings plc was incorporated in Ireland earlier this year for this purpose.
The announcement added that “it is intended that the new holding company will own all of the existing shares of the bank, and existing shareholders will receive shares in the new holding company in proportion to their current ownership. This will be effected by means of a Scheme of Arrangement.
“The bank remains fully committed to Cyprus and there will be no change to the day-to-day operations or business strategy as a result of the change of the Group’s structure. The bank’s headquarters, management and operations will all remain in Cyprus and the new holding company will be, and the bank will remain, tax resident in Cyprus. The bank will continue to be regulated by the European Central Bank and the Central Bank of Cyprus. The bank intends to comply with the UK Corporate Governance Code on a voluntary basis, affirming its commitment to the highest level of corporate governance and transparency.”
The change in the Group’s structure will require shareholder approval at an extraordinary general meeting in December, approval by the regulators (including the ECB and the CBC) and the sanctioning of the scheme by the Courts of Cyprus following a hearing upon the fairness of the scheme terms. It is intended that a circular setting out full details of the scheme will be made available to the Bank’s shareholders in the coming days and a prospectus in relation to the shares in the new holding company is intended to be published thereafter.
