Clearly, the transformation of RCB into an asset management company was warranted by sanctions against Russia and Russian interests following Putin’s invasion of Ukraine.
Initially, the bank tried to evade these sanctions by changing its shareholders. VTB a major state-owned Russian bank, was also a key shareholder at RCB.
But the trick didn’t work with the ECB amid negative political sentiment in the European Union, as Ukrainian cities are devastated one after the other by indiscriminate bombing, with thousands killed or wounded and millions fleeing to the western parts of the country or to neighbouring countries, such as Poland, Czech Republic and Romania.
In 2013, when the banking crisis in Cyprus erupted, the IMF, the ECB and the EU wanted RCB to be classified as a systemic bank, according to Cyprus Central Bank sources.
The bank was not big enough to qualify for such classification, but the arrangement allowed the Single Supervisory Mechanism to have direct access into the business of RCB.
Although the bank had nothing to worry about, it flooded its board of directors with political appointments from the local establishment.
A former attorney general, a former foreign minister, a former director of the foreign ministry were among the group of people sitting on its board without having any banking experience.
This arrangement may have raised some eyebrows at the ECB or the SSM because Basel III rules require that board members have sufficient knowledge and experience in banking or in related areas.
Michael S. Olympios is an economist, business advisor, Editorial Consultant to the Financial Mirror