By Alkman Granitsas and Michalis Persianis
NICOSIA, Cyprus--Shareholders at Cyprus's biggest lender, Bank
of Cyprus, overwhelmingly approved a new board of directors on
Thursday that includes a number of heavyweight international
financiers, part of the bank's efforts to recover from the island's
near fatal financial crisis last year.
The new board, which was approved by some 99% of shareholders,
comes after the bank's EUR1 billion ($1.25 billion) capital hike
this summer and reflects, in part, the new ownership structure of
the lender following that increase.
Swiss-born banker Josef Ackermann, who served a decade as head
of German banking giant Deutsche Bank AG and, until last year, was
chairman of the Zurich Insurance Group AG--was appointed as
chairman of the board.
Billionaire distressed asset investor Wilbur Ross, whose company
took up about 40% of the recent share increase, was also appointed
as director, while BoC's current chief executive and board member,
John Hourican, formerly with the Royal Bank of Scotland, was
re-appointed. The new board also includes a representative from the
European Bank of Reconstruction and Development, which committed
100 million euros to the capital hike and now controls a little
over 5% of Bank of Cyprus.
Analysts say that the appointment of Mr. Ackermann, who is seen
as one of Europe's most respected bankers, is meant to confer an
air of reputability to a bank that only a year ago appeared to be
teetering on the verge of collapse. In March 2013, the bank only
narrowly survived Cyprus's financial crisis when it was
recapitalized with depositor money as part of a controversial EUR10
billion international bailout for the island, which also led to the
introduction of capital controls--a first for a eurozone
country--to rescue Cyprus's financial sector.
Apart from seizing its own depositors' money, BoC was also
forced to absorb the loss-making number two lender, Cyprus Popular
Bank, or Laiki, which left it on the hock for some EUR9 billion
worth of emergency cash lending from the European Central Bank. The
financial crisis pushed Cyprus into a deep recession that, among
other things, have led to a collapse in the island's overinflated
property market and a concurrent spike in non-performing loans.
Although the bank is still struggling with those bad loans,
since taking office late last year Mr. Hourican has moved to
restructure the lender, shedding non-core assets and championing
the recent capital increase with foreign investors--over the
objections of his own depositor-cum-shareholders. Two of the bank's
biggest Russian investors, who became involuntary shareholders in
the bank during the bail-in, remained on the board with
shareholders reappointing Russian oligarch Vladimir Strzhalkovskiy.
Also voted to the board was a representative of the Renova Group,
controlled by Russian billionaire Viktor Vekselberg.
But the cash infusion helped BoC squeak past the ECB's recent
stress test last month and, in another sign of renewed confidence,
the bank aims to relist its shares in early December after they
were suspended in July 2013 in the aftermath of the financial
crisis. Cyprus's government has said it hopes to lift the last
capital controls by next year.
John Letzing
in Zurich contributed to article
Write to Alkman Granitsas at alkman.granitsas@wsj.com
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