Wil­bur Ross: “Sec­ond half will be more mean­ing­ful” for Bank of Cyprus

Financial Mirror (Cyprus) - - FRONT PAGE -

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.

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