Central Bank of Cyprus governor Chrystalla Georghadji said that the sale of the remaining assets of the defunct Cyprus Popular Bank, or Laiki, is dragging on partly due to regulatory requirements abroad.
Difficulties related to meeting regulatory requirements abroad are delaying the implementation of three agreements for the sale of an equal number of subsidiaries abroad, Georghadji told lawmakers of the standing Ethics Committee of the parliament on Wednesday, according to the emailed transcript of her speech. The committee’s session was dedicated to the management of Laiki’s assets.
The sale agreements concern Marfin Bank Romania, signed on December 30, 2015, Marfin Bank Serbia, signed nine months later and Marfin Bank Ukraine, signed in November.
The sale of other assets is linked to difficulties, Georghadji said. The refusal of the executive management of the Maltese unit, Lombard Bank Malta, to cooperate in a fresh attempt to find a buyer, after the partial lifting of an asset freeze court, is obstructing the process.
After the Resolution Authority, comprised by the central bank’s board of directors, had to cancel a tender for the appointment of advisors who would provide consulting services for the sale of the Investment Bank of Greece, as “only one bid was submitted,” the Resolution Authority is now considering its options.
Laiki also had the licence of its Russian unit Rosprombank withdrawn by Russia’s central bank in September while Pavlou was in advanced negotiations with a prospective buyer.
“The process of successfully selling the remaining Laiki assets is not an easy task,” the governor said. “There are big difficulties as a result of external factors, such as the financial situation of the subsidiaries, the inability of effectively control their operations and securing support from Laiki, the difficult financial situation of the countries they are operating and the regulatory framework”.
In the meantime, the value of Laiki’s 9.6 per cent stake in Bank of Cyprus, acquired as part of Cyprus’s bailout agreement in March 2013, fell to one third, she said. “According to KPMG’s appraisal report, the fair value of Laiki’s shares in Bank of Cyprus was €3.81m on March 23, 2013,” Georghadji said. “Despite the continuous steady improvement of Bank of Cyprus’s financial position with the increase in customer deposits and the repayment of the emergency funding, the value of the share remains at comparably low levels, and as a result, the value of the shares in possession of Laiki, fell to ca. €132m”.
The governor said that positions expressed by the Laiki creditors who will benefit from the sale of the assets is contradictory.
“On the one hand, they are criticising the delay in the sale of the assets which results to a loss of value and on the other hand they ask not to sell the three major assets, i.e. the Bank of Cyprus stake, IBG and the Lombard Bank of Malta, in anticipation of an increase in their value”.
