BANK of Cyprus pledged yesterday that access to fast-growing markets in Europe would further boost profits on the heels of an impressive financial year.
At the bank’s Annual General Assembly (AGM) in Nicosia, chairman of the board Eleftherios Ioannou said BoC posted income of 918 million euros in 2006, with its market capitalisation rising to 7 billion euros.
The cost to earnings ratio had dropped to 44 per cent, while the bank boasted an “enviable” 800,000 customers worldwide, Ioannou said.
“We do not fly high on the clouds, rather, we stand firmly on the ground,” noted CEO Andreas Eliades, describing the group’s policy.
He said BoC had achieved its three overall goals: control costs, boost earnings and minimise risks to shareholders.
And as a result of the economic success of the past year, the bank’s board announced a 17 cents per share dividend payout.
The BoC has already invested some £5 million in infrastructure in Russia, and will be opening its first branch in Moscow “any time soon”.
Yesterday’s AGM was something of an anti-climax, after Marfin Popular Bank (MPB) CEO Andreas Vgenopoulos did not show up to demand a place on the board.
MPB holds an eight per cent stake in the BoC.
Marfin is under investigation for a potential legal breach over acquiring the stake. The competition regulator wants explanations from Marfin on why it was not notified of the transaction, as dictated by law.
With the acquisition in question, and until the competition watchdog makes it ruling, Marfin loses any shareholder rights in the BoC.
As such, the AGM yesterday did not even bother to put a motion by Vgenopoulos to a vote. The Greek financier was set to propose an operations merger of the two banks in the Greek market.
Vgenopoulos pulled the offer 10 days ago, after what many call a face-saving meeting with Archbishop Chrysostomos, amid reports that the Bank of Cyprus was on its way to securing the necessary support from its shareholders to outvote the proposal.
In fact, yesterday’s attendance by proxy of shareholders was the highest ever, at a little over 60 per cent.
Still, Ioannou did not miss the opportunity to rub Vgenopoulos’ nose in it. Calling Marfin’s repeated overtures to BoC “a harassment”, Ioannou remarked:
“There is a saying that goes like this: put up or shut up.”
The Marfin debacle was also picked up on by shareholders during question time after the presentation of the financial results.
One shareholder urged the board to take a more aggressive stance towards Marfin.
“If Mr Vgenopoulos has the guts, let him come and offer cash if he wants to buy us out. Ask him to pay 20 euros per share, not an exchange of paper. See what he does then. Don’t be afraid to respond to him!”
The comment sparked a warm applause from the crowd.
It was not all smooth sailing, however.
There was harsh criticism of the bank’s past financial practices, with one animated shareholder reminding the board of former Central Bank director Christodoulos Christodoulou’s comment that banks should be grateful to him.
He was referring to Christodoulou’s assertion, during his farewell speech in April, that commercial banks had advanced as much as £600 million in unsecured loans for the purchase of shares during the 1999 stock market bubble.
“Did some of you gentlemen amass wealth from these goings-on?” the man said, addressing the board directors.
Another shareholder brought up the issue of Polis Polyviou, who resigned from the board last summer amid allegations of conflict of interest.
Polyviou had a dual identity in the bank, for whom he acted as a legal consultant.
Again, that matter had been given prominence by Christodoulou, who said that Polyviou’s law office received £1.3 million in fees.
According to Christodoulou, the bank employed around 350 legal consultants, who collectively received £1.1 million in 2005, each of them averaging £3,400.
Yesterday’s AGM also approved a motion to keep the CEO’s salary at £100,000.
