SSwweeeep­pi­in­ngg cch­haan­nggeess aafft­teerr AAGGMM EELLAA ppaayy--ddoowwnn ttoo ccoonnttiinnuuee

Financial Mirror (Cyprus) - - FRONT PAGE -

By noon on Thurs­day, the Bank of Cyprus will have a new chair­man and board, de­ter­mined to con­tinue with the re­struc­tur­ing plan and aim­ing to re­in­state the stock on the Cyprus and Greek bourses by the end of next month, all signs of sta­bil­ity and con­fi­dence re­turn­ing to the is­land’s lead­ing lender.

The AGM at 9am will prob­a­bly elect the ten­man board pro­posed by bil­lion­aire fund man­ager Wil­bur L. Ross Jr., with for­mer Deutsche Bank CEO Josef Ack­er­mann tak­ing the reins as new chair­man.

They will have their plate full as it will be dif­fi­cult to re­turn to prof­itabil­ity in an econ­omy dom­i­nated by over-lend­ing stub­bornly high lev­els of non-per­form­ing loans, mostly hous­ing mort­gages.

Next on the agenda will be the fate of the sub­sidiary bank in Rus­sia, Uni­as­trum, which the new share­hold­ers and board have to de­ter­mine if it fits within the as­set mix in or­der to de­velop it fur­ther (highly un­likely in the present state of the Rus­sian econ­omy) or main­tain it and even­tu­ally get rid of it.

A sim­i­lar fate awaits the in­surance sub­sidiary CNP As­fal­is­tiki, which even the French prin­ci­pals are not too keen on re­tain­ing be­cause of the re­ces­sion­ary state of the Cyprus econ­omy.

But one area where the new board and cur­rent CEO John Houri­can are in to­tal agree­ment is the con­tin­ued pay­ing down of the Euro­pean Liq­uid­ity As­sis­tance funds, last es­ti­mated by Moody’s at EUR 8.9 bln or 29% of the bank’s as­sets of EUR 28.6 bln, hav­ing dropped from 37% in March this year.

“Re­duc­ing ELA re­liance is credit pos­i­tive for the bank and a sign that it is healthy,” said a bank­ing an­a­lyst on con­di­tion of anonymity, adding that the re­cent cap­i­tal in­crease was also seen as credit pos­i­tive by the rat­ing agen­cies, while the pres­ence of the new share­hold­ers and nom­i­nee board mem­bers strength­ens con­fi­dence in the bank.

“The big­gest con­cern will have to be to re­duce the ex­po­sure to NPLs, presently half the loan book. This, com­bined with the fur­ther re­lax­ation of cap­i­tal con­trols, the sta­bil­i­sa­tion of the level of NPLs and their grad­ual re­duc­tion through ef­fec­tive means of re­cov­ery and re­struc­tur­ing, will put the bank on a healthy path once again.”

Bank of Cyprus was one of four sys­temic banks that passed the Europe-wide cap­i­tal stress tests last month, hav­ing raised EUR 1 bln three months ago and sub­se­quently paid down part of the bailout debt im­posed on now de­funct Laiki Popular Bank, which it was

Newspapers in English

Newspapers from Cyprus

© PressReader. All rights reserved.