BOC awaits CB verdict on EMP bid

Bank of Cyprus is now waiting for the verdict of the Central Bank of Cyprus, which for the Bank’s Management sake will not grant a permission to bid for control of Emporiki Bank of Greece as a way out of a difficult situation with the Greek stock market authorities.

The situation is difficult considering that the Greek Capital Markets Commission on Thursday rejected a request by BOC to withdraw from the race seeking control of Emporiki, citing uncertainties with the staff pension fund of the Bank and lack of assurances on whether assurances given by the Greek state covering the shortfall may be considered as constitutional or not.

The Greek Capital Markets Commission sent a warning to BOC headquarters pointing out that according to Greek law, a company may withdraw from the race for another firm only if the Capital Market Commission gives such a permission, or when shareholders reject the request of Management to proceed with a takeover, or when the relevant authorities of the company where it is domiciled (in this case the Central Bank of Cyprus) deny permission for the deal to proceed.

The Central Bank of Cyprus is reported to have opposed the EMP bid citing lack of information on the pension fund liabilities, which some say may reach EUR 600 to 800 mln as well as the steep decline in the capital adequacy ratio of BOC after the proposed merger with EMP, which would drop to 6.4%, well below its 8% minimum level.

Considering that in its prospectus, BOC had said that its offer for EMP, offering 6 euros per share plus 3.25 of its shares for every EMP share is subject to getting permission from the CB of Cyprus, then the salvation for BOC will come when the CB rejects the deal and gives Management an honourable way out of a very difficult situation with the Greek authorities.