An­a­lysts ar­gue over com­pe­ten­cies

Financial Mirror (Cyprus) - - FRONT PAGE -

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.

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