Unease with Hellenic CEO runs deep

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The bad blood between Hellenic Bank’s CEO, Oliver Gatzke, and major shareholders appears to be behind the board’s decision to sideline the German after allegations of market abuse.

In a statement to the Cyprus Stock Exchange on Monday, the island’s second-largest lender informed the authority it had suspended its CEO pending their investigation into the matter, which could be construed as market manipulation.

According to banking sources, the decision did not come as a big surprise to stakeholders.

Sources told the Financial Mirror that major shareholders had not been on good terms with Gatzke, whom they perceive to be accountable for the bank not hitting its profit targets.

They said that major shareholders also appear dissatisfied with how Gatzke handled an early retirement scheme, which should have been introduced in the first months after taking over in March 2021.

Hellenic, through Gatzke, had announced their intentions to go ahead with reducing their staff at an AGM held in late 2021.

This year the bank announced it would be going ahead with redundancies instead of the standard practice of offering an early retirement scheme.

The bank’s announcement on redundancies sparked a fierce reaction from staff who threatened strike action.

In August, Hellenic said it was backing down and would offer 350 employees the option to press the exit button for early retirement packages of up to €200,000.

The tension brewing between the bank’s CEO and shareholders exploded at last month’s AGM, when the largest stakeholder, Demetra Holdings, essentially accused Gatzke of market abuse.

Demetra Holdings CEO Nearchos Ioannou accused a “high-ranking bank official” of pressuring staff into buying shares. It later emerged that he was firing at Gatzke.

Demetra is Hellenic’s largest shareholder, with a 21% stake.

According to Phileleftheros daily, the accusations prompted a reaction from the Securities and Exchange Commission, which requested that Hellenic conduct a probe into the accusations.

Following CySEC’s request, Hellenic said Gatzke would be going on compulsory leave until the investigations are concluded.

Nearchou also pointed the finger at Gatzke for the bank’s poor performance, noting that operating profits of €132 mln in 2019 dropped to €95 mln in 2021.

Regarding the ratio of revenues to expenses, Ioannou stated that it could not be more than 40% – 50%, but Hellenic’s ratio is between 67% and 76%.

He also wondered how Hellenic managed to give only €105 mln in loans to large companies in 2021, from €276 million in 2020.

This is the first time a Cyprus bank has decided to suspend its CEO.

According to sources, regardless of the investigators’ verdict, Gatzke’s time at the bank is over, as his reputation has been damaged beyond repair.

Gatzke is considered the driving force behind the bank’s 2022-2024 Strategic Plan to transform and address structural challenges, with an increased focus on digitalisation and cost control.

The bank’s three-year plan includes packaging and selling off Non-Performing Loans, such as the most recent deal, Project Starlight.

The 54-year-old German banker joined Hellenic in March 2021 from Hamburg Commercial Bank.