CYPRUS: Hellenic Bank major shareholders searching for new direction

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Hellenic Bank may find itself struggling for clear direction among old and new shareholders with different views  as no stakeholder holds a winning hand on the board.

With the checks and balances that existed in Hellenic Bank's management between Third Point and Wargaming now a thing of the past, as the US hedge fund has seen its share shrink after deciding not to exercise its right to buy into the bank’s latest capital increase.

Meanwhile, through the bank’s recapitalization process, newcomers have entered the arena, reducing Wargaming’s shareholding percentage.

The Bank's new structure now consists of five major shareholders, three from the existing regime and two newcomers, and forming a consensus among them is considered to be a challenge affecting the Bank's future strategy.

Wargaming Group Ltd is now the biggest shareholder with 20.61% of the share capital, followed by Demetra Investments (18.42%), Poppy Sarl (17.30%), Third Investment Hellenic Recovery Fund LP (12.59%) and Cypriot investment fund 7Q Financial Services Ltd (9.99%).

Demetra Investments prior to the recapitalization process owned 10.5% of the capital share and was not represented on the board of directors.

With no side having a majority share package, consultations between the five are expected to take place for the formation of alliances and a mutually accepted board of directors.

Stockwatch quoted unnamed executives who pointed out that since there is no investor with a majority share, attempts to build bridges between major shareholders will be on the cards.

The bank’s current strategy is expected to be discussed and formulated by the new board which is to be elected during the bank’s general meeting in May.

Some of the big shareholders believe that the current strategy is the product of the outgoing administration and urgently needs updating.

Hellenic Bank currently has 13 directors, with processes focusing on filling the four positions of non-executive, non-independent consultants and the two CEOs.

Under the supervisory rules, at least 50% of the board of a banking institution must be independent.