February 17, 2020

Head of Cyprus’s Biggest Bank Resigns

Antreas Artemis complained that authorities rode roughshod over him and his board of directors by moving unilaterally to sell off units of the bank in Greece and planning to hit big depositors to pay for losses.

The changes at the Bank of Cyprus are part of the latest bailout deal negotiated between Cypriot officials and the so-called troika of international lenders: the European Commission, the European Central Bank, and the International Monetary Fund.

Mr. Artemis’s resignation, while not wholly unexpected following the controversial decision by international lenders to impose significant losses on the bank’s larger depositors, still caught the market by surprise and was a further reminder of how volatile and uncertain Cyprus’s financial system has become in recent days.

Bankers say that the fact that the board of the country’s largest bank had been left largely in the dark as its future was being discussed in Brussels and that an outside administrator had recently been named to oversee the bank in the coming months were factors likely to have contributed to his decision.

Despite promises since last week that the country’s banks would reopen Tuesday, the government late Monday ordered all of them, including the Bank of Cyprus and Cyprus Popular Bank — the nation’s largest financial institutions, with most of the accounts on the island — to stay shut through at least Thursday. The extended bank closing is to reduce the risk of a bank run by nervous depositors. Automated cash withdrawals will be limited to €100 a day.

On Tuesday, the Cypriot central bank said it had appointed Dinos Christofides, a well-known local businessman, to act as special administrator for Bank of Cyprus. Mr. Christofides, who operates a business advisory service in Nicosia, has long experience in auditing and advising major local and international companies.

Administrators are often assigned by governments, creditors or courts to replace management at troubled institutions, with a goal to restoring their finances.

In a statement, the bank said the resignation had not been accepted and “will only apply if not withdrawn within one week,” Reuters reported.

The island’s faltering banks suffered a new indignity on Tuesday, as Fitch Ratings said it was cutting its credit grades on Cypriot banks because of the losses imposed by the bailout deal on senior creditors.

Fitch said it was cutting its rating on Cyprus Popular Bank, known as Laiki Bank, to “default.”

Fitch also cut its rating on Bank of Cyprus to “restricted default,” a grade Fitch said means the bank has experienced a payment default on a bond, loan or other material obligation but has “not entered into liquidation or ceased operating.”

Laiki’s soured assets are being hived off into a so-called bad bank. Its good assets are being transferred to Bank of Cyprus, which is being recapitalized by converting uninsured depositors’ claims into equity. Fitch said it expects the losses on Bank of Cyprus’s uninsured deposits “to be material.”

Piraeus Bank of Greece said Tuesday it had acquired the Greek operations of three Cypriot lenders — Bank of Cyprus, Laiki Bank and Hellenic Bank — for €524 million.

The Greek branches of the Cypriot banks will reopen on Wednesday, Piraeus Bank said, and deposits “will not be subject to any emergency contribution or ‘haircut’ decided on for Cyprus.”

The acquisition, proposed last Friday by Greek authorities, “secures the stability of the Greek banking system, helps Cyprus tackle its crisis and protects depositors, customers and staff” of the banks, Piraeus Bank said.

The upbeat statement did not reflect the rueful mood in Greece, where newspaper headlines continued to lash out at Germany and Northern Europe for their tough stance in negotiations and lamented the possible implications for Greece, which is bracing for the return of troika inspectors next week.

Article source: http://www.nytimes.com/2013/03/27/business/global/europe-officials-seek-to-contain-cyprus-damage.html?partner=rss&emc=rss

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