The announcement came after a CBC board meeting, which looked into the matter of the 18 per cent stake in BoC currently held by Laiki’s administrator. The issue arose after BoC completed its recapitalisation last week and came out of administration. Its largest shareholder turned out to be Laiki, represented by its administrator. The EU decided in March to wind down Laiki and transfer certain assets to BoC, which, according to the same decision, had to seize 47.5 per cent of its clients’ uninsured deposits and use them for recapitalisation. Depositors received equity in return. It appears that the debate is part of a power struggle for control of the stricken lender, which is struggling to recover.
The Laiki administrator, now in possession of the 18 per cent, was appointed by the resolution authority, headed by CBC governor Panicos Demetriades. With the new BoC’s annual general meeting on the horizon, there appears to be concern by some that Demetriades will have influence over the largest shareholder in the BoC, and thus over the bank itself. All political sides voiced views on the matter yesterday, with former ruling party AKEL saying it should be left to the experts to decide.
AKEL, which is widely viewed as having the biggest responsibility for the collapse of the economy, said it was not the parties’ role to regulate such matters and decide on the details. “It is a serious mistake by some political figures to intervene in issues that do not concern them,” AKEL leader Andros Kyprianou said. “Political parties cannot decide on what the CBC or the BoC board will do.” Kyprianou said he was speaking about politicians who considered it their job to meddle in such matters.
Ruling DISY MP Prodromos Prodromou agreed but was quick to stress that a modern country must have the kinds of authorities that would exercise the necessary management through a transparent institutional framework. “It is not possible for the regulator to appoint or exercise control of on the board of a bank, which he supervises,” Prodromou said. Last week, reports said DISY leader Averof Neophytou was working on convening a special session of parliament during the summer recess to amend the resolution law passed in March, limiting the powers of the resolution authority, and either removing Laiki’s voting rights in the BoC, or dispersing the 18 per cent among Laiki’s shareholders (in their majority uninsured depositors whose savings were wiped out).
Banking sources have said that BoC shares cannot be legally transferred to and divided among Laiki’s creditors until Laiki enters into liquidation. This cannot happen until the latter sells off its subsidiaries in Romania, Russia, Malta and Serbia. If Laiki enters liquidation and has its licence revoked, without selling off its subsidiaries, measures will likely be taken by the national supervisory authorities in the countries where the subsidiaries are operating.
Source: Cyprus Mail