Houri­can to stay on as BOCY CEO

Financial Mirror (Cyprus) - - FRONT PAGE -

John Houri­can has agreed to stay on as CEO of the Bank of Cyprus, the is­land’s big­gest lender that un­der his watch con­cluded a ma­jor re­struc­tur­ing plan and boosted fun­da­men­tals.

Board Chair­man Josef Ack­er­mann told a share­hold­ers’ meet­ing that Houri­can, who had sub­mit­ted his res­ig­na­tion ear­lier this year and was about to step down in sum­mer, half-way through his con­tract, has agreed to a new con­tract.

“I have com­mit­ted to con­tinue to lead the team for an­other two years and I will do all I can to re­turn our bank to value and strength,” the re­newed CEO said.

An­nounc­ing the 9-month flat prof­its of EUR 73 mln af­ter tax, which Houri­can termed as ‘mod­er­ate’, the Chair­man and the CEO also said that now that sta­bil­ity has re­turned, the stock would seek listing on “more liq­uid, in­dex-driven Euro­pean stock ex­changes,” prob­a­bly the Lon­don Stock Ex­change.

The board launched a search for a new CEO last April “and we have ac­tu­ally made sub­stan­tial progress in this re­gard by iden­ti­fy­ing a short list of well qual­i­fied can­di­dates. At the same time, how­ever, we have been work­ing on John to en­cour­age him to re­con­sider his ear­lier de­ci­sion to step down and to re­main in­stead on board. We are de­lighted at the end that John and his fam­ily have agreed to do so,” Dr Ack­er­mann said.

Prais­ing the re­newed CEO, who will stay on for a two year term with an op­tion for one more year, the Chair­man said “John has done a re­mark­able job in lead­ing the bank over the past two years. He has lit­er­ally put Bank of Cyprus on the global fi­nan­cial map and jus­ti­fi­ably earned the recog­ni­tion of “Banker of the Year” be­stowed on him by the Euromoney Awards for Ex­cel­lence for 2015. His achieve­ments are nu­mer­ous and im­pres­sive.

“In a nut­shell, he has, in a short pe­riod of time, in­stilled self-con­fi­dence and mo­ti­vated a rather dis­cour­aged staff, es­tab­lished rig­or­ous and ef­fec­tive man­age­ment struc­tures, em­pow­ered a team of tal­ented young ex­ec­u­tives to re­spond to the new chal­lenges and im­ple­mented a de­mand­ing re­struc­tur­ing plan, es­tab­lish­ing a new, ded­i­cated loan re­struc­tur­ing and re­cov­ery di­vi­sion. He has also se­cured a very suc­cess­ful and very timely re­cap­i­tal­i­sa­tion of the bank from for­eign in­vestors, made ma­jor strides in delever­ag­ing non-core as­sets in other coun­tries and sharp­ened the fo­cus of the Bank’s core ac­tiv­i­ties in Cyprus.”

Houri­can is cred­ited with lo­cat­ing the present mega share­hold­ers, in­clud­ing bil­lion­aire ven­ture cap­i­tal­ist Wil­bur L. Ross, who pumped in EUR 400 mln in early 2014, as well as the Euro­pean Bank for Re­con­struc­tion and De­vel­op­ment (EBRD) that added a fur­ther 120 mln, from among the EUR 1 bln of fresh cap­i­tal that was raised.

At the same time, the CEO’s two-pronged strat­egy had been to delever­age the bank from all its non-core as­sets, hav­ing dis­posed of all non-Cyprus hold­ings up un­til Septem­ber, and im­prove the fun­da­men­tals by low­er­ing staff and op­er­at­ing costs, while en­cour­ag­ing new de­pos­i­tors, re­port­edly at­tract­ing some 500 mln eu­ros in the year to date. He was also adamant in pay­ing down the ECB fund­ing through the emer­gency liq­uid­ity as­sis­tance (ELA) pro­gramme, that has been re­duced from EUR 11.4 bln to EUR 4.3 bln in two years.

The re­cent pas­sage by par­lia­ment of a se­ries of reg­u­la­tions, in­clud­ing the frame­works on in­sol­ven­cies and fore­clo­sures, that will al­low the bank to re­cover some EUR 12 bln of non-per­form­ing loans, as well as the lat­est bill al­low­ing banks to sell off their bad loan port­fo­lios to in­de­pen­dent funds, is also ex­pected to im­prove the bank’s oper­a­tions and prof­itabil­ity.

How­ever, the road ahead re­mains bumpy as Houri­can has stirred a hor­net’s nest by blam­ing politi­cians from med­dling in bank­ing af­fairs and de­lay­ing the set of new reg­u­la­tions, for which the bank’s CEO has drawn pub­lic crit­i­cism, which will not be the last.

Con­clud­ing his speech, Ack­er­mann told share­hold­ers that “the bank’s strat­egy will re­main fo­cused on serv­ing the needs of our clients and achiev­ing value for our share­hold­ers, while also aid­ing the re­cov­ery of the Cypriot econ­omy. The bank and the Cypriot econ­omy are in the same boat and we need to work to­gether with the whole Cypriot so­ci­ety.”

“Our im­me­di­ate top pri­or­ity re­mains the fur­ther en­hance­ment of the qual­ity of our as­sets through a steep re­duc­tion in the out­stand­ing stock of NPLs and con­tin­ued delever­ag­ing of non-core as­sets,” he said.

“At the same time, we will fo­cus on ad­vanc­ing the core ac­tiv­i­ties of the bank through a broader range of fi­nan­cial prod­ucts and ser­vices, bet­ter client-cen­tred ser­vice, stepped up tech­no­log­i­cal in­no­va­tion, and en­hanced op­er­a­tional ef­fi­ciency. In ad­di­tion, we will con­tinue to ex­plore op­tions for the di­ver­si­fi­ca­tion of the bank’s fund­ing sources and the po­ten­tial listing of the bank on more liq­uid, in­dex-driven Euro­pean stock ex­changes,” he con­cluded.

The last note was echoed by re­newed CEO Houri­can who told share­hold­ers that “we in­tend to im­prove the liq­uid­ity and at­trac­tive­ness of our stock by at­tract­ing more in­sti­tu­tional in­vestors in the eq­uity. We are ex­am­in­ing the pos­si­bil­ity of listing the stock in a more liq­uid, in­dex-driven, Euro­pean stock ex­change.”

In Au­gust, Houri­can had told the Sun­day Tele­graph that the bank aimed at be­ing listed on the Lon­don Stock Ex­change as early as next April, a step that will en­sure more vis­i­bil­ity and an in­crease of its cap­i­tal­i­sa­tion to its book value of EUR 3.5 bln.

“In March 2013 we suf­fered the in­dig­nity of be­ing the only Bank and Eu­ro­zone Sov­er­eign na­tion to bail in its un­se­cured de­pos­i­tors and im­pose de­bil­i­tat­ing cap­i­tal con­trols. We lost the con­fi­dence of our cus­tomers, our in­vestors, our staff and all stake­hold­ers,” he said.

“Al­though we re­main at war with eco­nomic cir­cum­stance, to­day the pic­ture is much im­proved. We have sig­nif­i­cantly strength­ened the bank’s abil­ity to weather the storm. Its cap­i­tal base stands at 15.6%. The bal­ance sheet is less ex­posed to over­seas shocks and sig­nif­i­cantly delever­aged. We have dra­mat­i­cally re­duced our reliance on ELA and be­gun to re­build our de­posit fran­chise. We have sta­bilised and be­gun re­duc­ing delin­quent ex­po­sure lev­els.” Houri­can warned, how­ever, that many dan­gers re­main. “We must con­tinue to bat­tle all is­sues across the Group with the same in­ten­sity as be­fore – we still have much to do in build­ing value for our in­vestors and a great bank for our cus­tomers and employees.

“We be­lieve our long-term out­look is bright. We con­fi­dent in the group’s prospects and in our abil­ity de­liver sus­tain­able re­turns for our share­hold­ers.” are

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