articles | 04 December 2014

Bank of Cyprus to stimulate investor appetite at roadshows in NY, London

Bank of Cyprus launched a roadshow spree in New York and will continue in London in an attempt to brief investors ahead of the lender’s stock exchange re-listing in Nicosia and Athens set to be completed by December 16, 2014.

The roadshow blitz centres on the lender’s prospects following the capital increase and the composition of a new board of directors, the source who spoke on condition of anonymity said. “We are talking about non-dealing roadshows, which means investors will be offered only information about the bank’s future steps”.

The Bank of Cyprus delegation to the two international financial centres includes the lender’s chief executive officer John Hourican, the finance director Chris Patsalides, the chief financial officer Eliza Livadiotou, the director of the restructuring and recovery division Euan Hamilton, chief risk officer MichalisAthanasiou and investor relations manager Constantinos Pittalis.

Potential investors can get information about the bank’s recent recapitalisation, the successful completion of the European Central Bank’s asset quality review also known as stress tests bringing the bank under the direct supervision of the ECB’s single supervisory mechanism, and its new “world class board of directors,” a statement on the lender’s website said.

The new board of directors includes vice-chairman US billionaire Wilbur Ross, controller of 18% of the lender’s share capital, also known for making money by investing in the Bank of Ireland which he helped restructure before selling his stake for a profit, and former Deutsche Bank CEO, the Swiss national and now Bank of Cyprus chairman Joseph Ackermann.

Depositors at Bank of Cyprus saw nearly half of their deposits turned in to equity as part of Cyprus’ bailout terms in March 2013, which also included the merger with the failed lender Cyprus Popular Bank, also known as Laiki. As a result Bank of Cyprus inherited Laiki’s €9.6 billion outstanding debt to the European Central Bank in the form of emergency liquidity assistance.

The outstanding ELA amount fell to €7.5 billion, according to the lender’s statement.

The bank, which saw its non-performing loan ratio increase to 60% by September 30, concluded a €1 billion capital increase in August in which Ross, the European Bank of Reconstruction and Development participated and other investors participated. As a result, the bank’s capital equity tier 1 ratio rose to 15.4% compared to a minimum 8%  regulatory ratio.

Bank of Cyprus, which has a 4% market share of gross loans and 25 % of deposits in Cyprus’ banking system, will have to lure investors “by informing them that things are going well and when the economy recovers, the problem of the banking sector will considerably decrease, which will bring them profit,” Michalis Florentiades, chief economist at XM.com, an online financial services company, said. “Cyprus is currently in a programme but when it recovers, it will bring them profit”.

Whether this message will be convincing will depend on the analyses available to the investors, he added. “Someone out there may regard Cyprus’ case with more optimism, however you have to take the political risk too into account but it is more difficult to assess it abroad”.

Source: Cyprus Mail

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