Wilbur Ross: “Second half will be more meaningful” for Bank of Cyprus
Following somewhat disappointing first half results, where Bank of Cyprus announced a profit of about EUR 60 mln, albeit a significant turnaround from the EUR 337 mln losses it reported in the final quarter of 2014, the bank’s vice chairman and biggest shareholder believes the “second half will be a more meaningful period.”
The island’s biggest lender that was twice bailed out by shareholders and depositors, has reported two quarters of profits, improved its funding structure, boosted capital and lowered its reliance on EU emergency funds. This seems to make Wilbur L Ross Jr. more determined to hold on to the 18% stake controlled by himself and co-investors.
“There is a lot of noise in the June numbers, but the bank is meeting its plans to divest units, trim (its costs) and reduce the dependence on the Emergency Liquidity Assistance (ELA),” he told the Financial Mirror.
From a EUR 11.4 bln in ELA debt it had inherited after Laiki Popular Bank crashed in 2013, the bank said it halved its ELA exposure during the second quarter to EUR 5.9 bln, thanks to a continuation of positive customer flows and deleveraging, and by a further 500 mln post quarter-end to EUR 5.4 bln at the end of August.
“The gradual elimination of capital controls has affected deposits and the second half will be a more meaningful period,” for new deposits as well, Ross said, adding that the “delay of the foreclosure and insolvency laws until August was a problem,” as regards the bank’s slow recovery of assets and loan restructuring efforts.
“We have no immediate plans to sell (the portfolio of) non-performing loans nor to raise any more money for equity,” he said, in response to suggestions that banks in Cyprus, laden with NPLs, had been waiting for the foreclosures bills to pass through parliament in order to offload distressed loans or NPL portfolios to other investors or funds willing to take on the risk. He also denied talk of a need for more capital at the bank. Looking ahead, and considering that the energy, transport and tourism markets have all been affected by the slow growth in China, Ross expressed confidence in the Cypriot authorities as regards efforts to help the economy recover.
“The government is developing a robust growth strategy,” he said, adding that the ‘China factor’ is irrelevant. Reports also suggested that outgoing CEO John Hourican, who announced his resignation in April on “personal grounds” with the intention of returning to Ireland to spend more time with his family, will now be staying on until the end of November, when the bank’s AGM will be held.
Hourican was supposed to have left at the end of August, but the board meeting to choose his successor, scheduled for earlier that month, never took place.
“We are happy John is staying longer and have good candidates to succeed him,” Ross, said.
As regards the recent elections in Greece and the 1.3 bln euros he and his co-investors pumped into Eurobank Ergasias, the third-largest bank, Ross was more subtle.
“The Greek election results and the asset quality review (later this year) and stress tests will determine the outlook for the Greek banks,” he said.