THE FUTURE of the Cyprus banking system has once again come under the microscope as the Dubai Financial Group (DFG) increased its stake in Marfin Popular Bank (MPB) to 19.9 per cent on Wednesday while announcing its intention to take its share capital up to 30 per cent in MPB and 20 per cent in Marfin Investment Group (MIG).
The Dubai Group bought 2.5 per cent of MPB’s share capital from the bank’s CEO Andreas Vgenopoulos at €12 a share, increasing its stake from 17.4 per cent to 19.9 per cent. The shares went for a total €238m, from which Vgenopoulos reportedly pocketed around €90m in profits.
The shopping spree doesn’t stop there though. DFG, behind which sits the Emir of Dubai, announced its intention to seek Central Bank approval to tighten its grip over MPB by taking its share ownership up to 30 per cent. At the same time, DFG wants to buy the bank’s 6.45 per cent stake in MIG at €7 a share which would take its shareholding of MIG up to 16 per cent. The Dubai Group stated it intends on increasing that shareholding to 20 per cent ‘over time’.
Meanwhile, he may have given up his shares in MPB for a substantial fee but this is not the end of Vgenopoulos in Cypriot banking, with his role in the Dubai Group taking on increasing importance. DFG has carved out a significant role for the Greek banker, appointing him chairman of its subsidiary DFG South Eastern Europe for a period of five years while nominating him for top executive positions in both MPB and MIG, also for five years.
In comments to the press, Vgenopoulos said his plan was to make the bank the largest financial institution in south east Europe in the next four years.
“We want to make Marfin Popular Bank a European Champion in South Eastern Europe… Ten years ago we started off with €600,000 and we reached where we are today. At the current stage, we have a total capitalisation of €14 billion. Our aim is to reach €140 billion,” he was quoted saying on the Stockwatch website.
With Marfin Investment Group having enormous investment capital of €6.9 billion, Vgenopoulos made it clear there was no limit on the kitty for further bank acquisitions. “The bank does not exclude the possibility of acquiring other banks in Greece in the next four year period,” he said.
He also said Efthimis Bouloutas would be proposed for the post of CEO of MPB, with Constantinos Vasilakopoulos, former Bank of Cyprus officer, for CEO of Marfin/Egnatia.
Finance Minister Michalis Sarris said the purchase of shares was a clear commercial and private act which the ministry was monitoring with interest. “It would be a blessing to keep the Cypriot character of banks as much as possible. But on the other hand, there has to be a balance between a free market and the opportunities that come,” he said.
Economist Costas Apostolides sounded a note of warning for the Cypriot bank. “When the three companies merged [Egnatia, Marfin and Laiki], I anticipated that the Dubai Group would increase its interest and essentially control the company and that is what is happening,” said Apostolides.
“Now, I anticipate that its headquarters will move to the Dubai Financial Centre in Dubai. It is clear Vgenopoulos was acting on behalf of Dubai Group. He made a lot of money from the move. The Dubai Group is controlled by the Emir who also set up the Dubai Financial Centre. He wants to build it up. They have spent billions on this group and want to move all their acquisitions to the Financial Centre. They are looking now to buy more banks in Greece. The result for Cypriot banks is they will become subsidiaries of the Group.”
Asked if this was a negative development, the economist said: “When banks are not Cypriot-owned this affects policies, particularly during times of crises. It is very important that major banks stay in Cypriot hands in the event of future crises, like the one that happened in 1974.”
