Analysts argue over competencies
Investor Wilbur Ross and Tyrus Capital, who head a group of investors that pumped 400 mln euros into Bank of Cyprus, announced a new slate of directors for election to the bank’s board at the annual meeting of shareholders on November 20, with former Deutsche Bank CEO Josef Ackermann expected to take the chair.
The proposed board, that will in all likelihood be elected, also sparked a flurry of comments on social media, in particular the Financial Mirror’s Twitter page, with most of the comments related to Ackerman’s post and his previous activities.
European University Cyprus professor Alex Apostolides called the proposed board a “very positive move. Star class,” he said, adding that the bank was finally getting ?an effective board after 3 failed ones.”
However, economist George cautioned not to be too hasty.
“We will see how effective they are, we had the same hopes after the bail-in,” he said, with other commentators recalling that there was similar criticism when John Hourican was appointed CEO and that they should all be judged on results and not on a past image or rumours.
Fiona Mullen, Director of Sapienta Economics and a regular contributor to the Financial Mirror was more practical, adding that perhaps foreign management was good for the bank.
“All I am saying is that I would do it differently if it were up to me and I needed borrowers to pay their debts back,” Mullen said.
According to an announcmenet issued in New York, the new board “has been selected to add financial expertise and will better reflect the shareholder base following the recent stock issuance.”
Following a three-tier capital increase for a total of 1 bln euros, Ross and his co-investors will control about 19% and the EU’s ‘ merchant bank’, the European Bank for Reconstruction and Development, a further 5% after pumping in 120 mln.
The new board deposes current chairman Christis Hassapis, a University of Cyprus economics professor who stepped in last September on the behest of major local investor groups, while
Markides the number of original Russian and Ukrainian directors has been slashed from six to just one. The proposed members of the new board are Dr. Ackermann (non-executive Chairman), Wilbur L. Ross Jr., Chairman of WL Ross & Co. and Vladimir Strzhalkovskiy, the current vice Chairman (Vice Chairmen); Arne Berggren, nominated independently by the EBRD; Maksim Goldman, a Director of Strategic Projects at Renova; John Hourican, CEO of Bank of Cyprus; Christakis Patsalides, Finance Director of the bank; Michael Spanos, former director of the Central Bank of Cyprus; Ioannis Zographakis, Chairman of the bank’s audit committee; and Marios Kalochoritis, member of the board of directors.
All board memberships are subject to approval by the Central Bank of Cyprus.
Just two weeks ago, the Bank of Cyprus board decided to call for a shareholders’ meeting on November 20, but did not add any further details, such as when the present board would step down.
Central Bank of Cyprus Governor Chrystall Yiorkadji had sent a stern letter to the board days earlier directing them to resign and seek re-election, if they wish, at a shareholders’ meeting after the latest company restructuring.
The board had initially asked the centralbanker to vet billionaire Ross, who, together with other investors is pumping 400 mln euros into the island’s biggest lender as part of the 1 bln recapitalisation approved last month.
Yiorkadji reportedly replied that instead of adding Ross as the 14th member to the current 13-strong board, that they should all resign and seek re-election at an upcoming shareholders’ meeting.
At the time, it was unclear if the EBRD would also seek a board representation, to ensure that its investment of 120 mln euros is in check.
The centralbanker also warned the board to refrain from taking any executive decision that would impair the bank’s activities or burden a future management with unnecessary responsibilities.