WWaass HHBB’’ss CCEEOO ppuusshheedd oouutt??
The long-time chief executive of the Hellenic Bank, whose conservative policies may have saved the bank from a similar demise of the other lenders in Cyprus, announced his resignation on Monday in what analysts believe is an effort by new shareholders to have a greater say.
Makis Keravnos, CEO since September 2005, having previously served as Minister of Labour and Minister of Finance after the accession of Cyprus to the EU in May 2004, has on several occasions criticised the poor management of other banks that led to their being taken over by foreign investors.
In a heartfelt message to staff and shareholders, Keravnos said that Hellenic Bank overcame the economic crisis with the least possible impact.
“No depositor lost even a cent from the writedown of deposits [as imposed on other banks] and the Hellenic Bank maintained strong name, one that instills trust, which is why we managed to recapitalise with private investors’ funds,” he said. “My decision is final,” Keravnos said, adding that “due to me decision I can no longer be present. The (bank’s) new management must actively and immediately take charge and participate actively from the start.”
He explained that his withdrawal was mutually agreed and on amicable terms. Keravnos added that due to the ongoing developments and challenges in the economy – stress tests, ECB’s supervisory role, new regulations – the bank is entering a new phase of revising its medium to long term strategic plans.
The bank said in a statement that the board has recruited the advisory firm Heidrick & Struggles to find suitable candiates for the job, suggesting that the new CEO will not necessarily be a local candidate.
Archbishop Chrysostomos II, head of the Church of Cyprus that has seen its stakes in both Hellenic and bigger lender Bank of Cyprus dwindle due to their rescue by local and foreign funds, on Sunday confirmed news of Keravnos’ resignation, exactly a year prior to the expiry of his current contract.
The church leader said that with the two investors now controlling about 45% of the bank – Third Point of New York and Wargaming.net, the online virtual battle platform controlled by Belarus investors – have the final say, much to his previous objections to the arrival of such investors who displaced the Church’s former control of 25% in the bank.
But this was considered a necessity as local investors were unable to prop up the bank’s capital due to the economic crisis that followed last year’s bailout by the Troika of international lenders. Asked if Keravnos was being forced to resign, the Archbishop said “they (Third Point and Wargaming) have the majority and they control the bank.”
In May, Hellenic Bank shareholders had approved the appointment of a new board, including the first female chairman of 40-year-old bank, Irena Georgiadou, formerly Commissioner responsible for Public Sector Reform.
On Monday, Georgiadou told CyBC radio that Makis Keravnos’ resignation was nothing new and that it had been offered in May.
Hellenic Bank announced that after-tax losses doubled year-on-year to EUR 95.5 mln, due to a deterioration of the bank’s loan portfolio and further increase in provisions.
The bank’s new chairwoman, Irena Georgiadou, in her first report to shareholders, warned that the Cyprus economy and society continued to face “an unprecedented crisis”, but that the obstacles faced by the crisis will be overcome bringing better days for all.
Georgiadou said that during the second quarter, the bank strengthened its balance sheet further with comfortable liquidity and improved coverage of nonperforming loans (NPLs). Deposits increased by 6% since the end of 2013, and the net loans to deposits ratio improved even further to a best in class ratio of 57%.
“In terms of capital, we comply with the regulatory requirements. In anticipation of the results of the Comprehensive Assessment and the ensuing Stress Tests by the ECB, we are considering our capital plans and in this respect we have engaged the firm Rothschild who