THE CHAIRMAN of Marfin Popular Bank (MPB) resigned yesterday, citing a potential conflict of interest as a major shareholder during attempts to boost its capital levels in which nationalisation could not be ruled out.
Andreas Vgenopoulos said he had given notice of his resignation from his position as non-executive chairman as well as a member of the board.
Based on preliminary EBA estimates Marfin needs an estimated capital buffer of €2.1 billion to reach a core tier 1 ratio of 9 percent by June 2012. It is the most heavily exposed to Greek debt among Cypriot banks.
Cypriot authorities are now discussing draft legislation to assist banks if they require recapitalisation, a move which could imply temporarily part or full nationalisation. Officials say this would be a last resort and that banks must tap their own resources first.
“I believe that during these challenging times, the chairmanship of MPB should not be held by somebody who is also representing a large shareholder of the bank, and whose presence could possibly create conditions in which conflicts of interests could arise,” Vgenopoulos said.
He said it was to the benefit of Cyprus that banks remain in private hands, but not at any cost if it was to the detriment of the real economy.
“Such an attempt will lead to a policy of balance sheet deleveraging aiming at reducing the banks’ capital needs and will cause or exacerbate a recession, which will be detrimental both to society at large as well as ultimately to the banks’ private sector shareholders,” Vgenopolos said. “If the government’s intention is for banks to remain private, this should be done with the terms that ensure an uninterrupted flow of credit towards companies and households.”
Dubai Financial Group is the bank’s largest shareholder. A separate statement from the bank said Constantinos Mylonas, a non-executive board member, had been appointed chairman. Vgenopoulos said there was still a great deal of uncertainty on what recapitalisation would be required. He said however that Cypriot banks’ shareholders were “strong” and, if market conditions were good a full or part nationalisation would be avoided. On Thursday its main domestic competitor, Bank of Cyprus said it planned a €396 million rights issue and a voluntary exchange of convertible enhanced capital securities through the issue of up to 600 million in mandatory convertible notes
