Central Bank Governor Christodoulos Christodoulou continued to clash with Bank of Cyprus hierarchy over board line-up and ownership levels, which were swiftly countered by Bank of Cyprus CEO Andreas Eliades.
Christodoulou started the war of words when during remarks to Sigma TV he noted the low level of control exercised by the board of Bank of Cyprus, the lack of action by the board to defend the bank from a hostile bid and the risk of control passing into other hands, considering that 30-35% of the capital is now controlled by foreign institutional funds.
In response, Andreas Eliades and the architect of the spectacular turnaround witnessed by the Group during the last two years, hit back stating that the board, with about 2% control does not need to own more stock provided that it follows a prudent corporate governance policy, and at the same time expressing his surprise at the tone of the remarks made by the Governor.
The Governor hit back stating that “Eliades must be talking about another Central Bank Governor, since I have done so much for the Bank of Cyprus and helped it emerge from difficult times.â€
Christodoulou stressed that only the management and shareholders can decide how to react to takeover offers, adding that Cyprus banks are now highly profitable, which makes them attractive for takeovers.
However, he did not clarify whether he wishes to see BOCY pass into foreign hands or not and why he wants the board to increase its stake in the bank, something that is not among its own requirements when persons are appointed to bank boards.
Bank of Cyprus sources are correct to state that as long as the management and the board are delivering above-average results and are practising correct corporate governance, meaning transparency and prudent management systems are being adhered to, then there is no risk of foreign fund managers turning against the Management.
It is true that foreign institutional funds control 30-35% of the capital of the bank, in addition to 20% held by local institutional investors, but Bank of Cyprus sources insist that they should not be considered as a threat, as long as the bank is producing the desired results and the share price continues to trade higher.
The same sources state that one of the requirements before institutional funds invest in a particular stock is the level of free float and wide public ownership of a stock, which are met by Bank of Cyprus by a wide margin.
The fact that Bank of Cyprus management has delivered the promised results and surpassed them by a wide margin means that the team headed by Eliades enjoys the respect and wide support of the Bank’s shareholder base, which is probably the best “weapon†against Bank of Cyprus passing into “unwanted†hands, the sources said.
