IT IS NOT this establishment’s style to gloat when its predictions prove correct, but occasionally we have to put this style aside and enjoy the cheap thrill of writing, “we told you so” and “we were right”.
Although we had not predicted that the Bank of Cyprus would eventually withdraw its offer to buy Greece’s Emporiki Bank for the astronomical amount of 3.78 billion euros – even our cynical establishment could not have credited the B of C board with such majestic amateurishness – we did argue that it was a mega-risky move and expressed the hope that the Greek government would reject the bid, thus saving our leading bank, its shareholders and our economy.
Four weeks ago we had written that the B of C was “tiny by European standards, with no experience of major takeovers, without the cash to finance the deal” so why did it want to play banks with big boys? We added:
“The fact that they put together a bid in three days is indicative of how little research was done about Emporiki. Any serious organisation would have devoted months of researching all aspects of the takeover subject, but not the great brains at the B of C who in a few days decided to spend 3.78 billion euro.”
They had not carried out a due diligence investigation, one board member claiming that the bank had found out all it needed to know about the takeover target from former Emporiki staff who were now employed at the B of C. Well obviously their new employees did not tell the head honchos of the bank very much about the legal dispute regarding the Emporiki workers’ pension fund.
According to bank insiders, a Greek court decision regarding bank employees’ pensions meant that the future owner of Emporiki would have been lumbered with a 300 million euro debt. This was the official reason given by the B of C board for withdrawing its offer. It was dismissed as “irrelevant” by Greece’s finance minister, who saw it as a lame excuse and accused the B of C board of not showing the necessary “seriousness and responsibility required” for take
He did have a point, considering the chairman and the CEO of the bank of four continents, had both said the offer for Emboriki would be increased if there was a higher bid, implying that they had more money to waste. Surely if the takeover of Emboriki was such a great piece of business, the board could have afforded to pay the debt, especially if the board did not have to up its bid.
The money that would have gone on making a higher bid (it would not have been a couple pounds more) could have gone on covering the 300 million debt, but maybe the board did not think of that – just like its members did not think of asking for a due diligence study, before offering 3.78 billion euros for state-owned bank.
SO WHY did the board decide to withdraw its offer, after boring us senseless telling us what a fantastic deal the takeover was? Did B of C head honchos get cold feet at the last minute fearing that they would not be able to make the acquisition work? Maybe they finally realised that they could not play banks with the big boys and decided to stick to what they knew how to do – playing ppirilia (marbles) with kids their own size.
We can only speculate but several factors could have clinched the decision. First there was the Cyprus Central Bank and Governor Ttooulis to consider. He had given a provisional approval to the B of C offer, but a final decision would be made after proper study of the details of the deal and its implications. One theory is that the B of C board had been told that Ttooulis would not approve the takeover and decided to withdraw its offer before the Central Bank decision was announced. The board would still look pretty stupid, but less stupid than if it had the much-hyped deal vetoed by Ttooulis.
A second factor is that the B of C started finding out that the state of Emporiki was not as good as originally believed. The pension dispute was one problem, but there may have been many more issues (bad debts etc), which the bank was not aware of when it made its offer. Nobody would ever admit this as it would make the bank’s head honchos look rather incompetent.
A third important factor was that the shareholders had not been convinced by the board that the
acquisition was in their interest. The B of C share price was on a downward path ever since the Emboriki offer was announced.
As soon as rumours surfaced that it would fall through, the share price rose, which illustrated the lack of faith shareholders had in the takeover. They appeared to have had even less faith in the board’s ability to make the deal work and who could blame them?
A COUPLE of weeks ago, big shareholders of the B of C were called up and asked to visit HQ for a meeting with Chairman Vassilis Rologis. All were told that, as big shareholders, the chairman wanted to seem them personally to explain to them the bank’s plans. It would be a small meeting (about 10 people) at which each shareholder would be able to ask the chairman whatever he or she wanted.
Flattered by this special treatment, most of the people called by the bank showed up. Some headed directly for the chairman’s office, where they thought this intimate meeting would take place. They were ushered instead into a large auditorium and found to their horror that some 300 people had been invited for this small, personal meeting with Rologis.
Worse still, the chairman wasn’t there to greet them. Most board members sat on a platform facing the auditorium, but the chairman’s seat was empty. Ten minutes after the meeting was scheduled to start and with the ‘privileged shareholders’ getting twitchy, the doors flung open and in stormed Rologis, like a victorious US general returning from battle, and started shaking hands with his adoring guests, as the rest of the auditorium applauded.
It was bizarre, considering Rologis had done nothing to merit even mild approval, let alone rapturous applause – the guy had brought them there under false pretences and they were applauding him like a returning war hero.
THE FIASCO in Greece was not the only banking melodrama we witnessed last week. A couple of days earlier, on Monday, Laiki chairman Kikis Lazarides sent a heart-wrenching letter to staff telling them that he had decided to step down now and not wait until the end of the year.
The reason for this was because he could not possibly agree on the “different approaches to human resources of the Group” brought in by the new owners of Laiki. The new owners, Marfin, “allowed the creation of uncertainty about the professional future of members of the big Laiki family,” a sentimental Kikis wrote in his letter.
Being a champion of the proletariat, Kikis, the socialist banker, could not just sit and watch the greedy capitalists of Marfin adopt non-socialist management techniques and therefore had to leave. He could not become party to the turning of Laiki into a capitalist bank was his message, but he stopped short of urging his beloved workers to revolt.
It was a bit unprofessional to write such a letter, but he was obviously hurt by the new owners’ decision to boot him out at the end of the year and was trying to get his own back. But Kikis has a lot of nerve to complain about Marfin, considering he was the one who arranged for the Greek company to buy HSBC’s 20 per cent stake in Laiki.
And why had he done that? Because he had fallen out with HSBC over the multinational’s perfectly reasonable demand to have more of a say over Laiki’s decisions. Unwilling to surrender his total control of the bank, Kikis found a buyer for HSBC’s stake, hoping that the new owners would allow him to maintain his stranglehold on Laiki. Big mistake.
If there is anyone to blame for the uncertainty being faced by Laiki workers, it is not Marfin, but the man who opened the door for Marfin, in the hop
e to keep his power intact. He wasn’t thinking about the interests of his devoted workers then.
WHY IS it that in Cyprus not even bankers can behave like bankers? Why do they turn into a pile of mush and want to be loved like a Mother Teresa? Kikis’ letter was a monument to cheap sentimentality, handed out with a pack of tissues.
“I would have achieved nothing if I did not have your love, support and devotion at the Group as well as your hard work,” wrote the father of the banking proletariat. It was not a one-way relationship either. “This love and appreciation, I made sure always to reciprocate…” Kikis’ resignation, was not just the end of an era it was also the end a great love affair.
But do not worry, dear readers, that Kikis will have nothing to do. On the contrary, he will be able to concentrate on his other public duties. Currently Chairman of Council of the Cyprus University, the Cyprus Olympic Committee and the Foundation of Cyprus Culture (nice joke, that), he informs his staff that he could take charge of other organisations as well.
His bosom buddy Tassos has reportedly already prepared a new post for him. He is to make him chairman of a State Music Foundation the government wants to set up.
EWART Williams, the biggest admirer of the Governor of the Central Bank, ignored the invitation we extended to him last week, to visit our establishment for coffee so we could get to know him.
However we seem to be making some progress in our investigations to establish why a guy called Ewart, living in Pervolia, would take such an unhealthy interest in what a disreputable and irresponsible establishment wrote about Governor Ttooulis.
Well, we have found out that there is a certain Mrs Williams employed at the Central Bank, who also happens to live in Pervolia. We have not yet established whether Mrs Williams is married to our friend Ewart, but what is the probability of a Mr Williams and a Mrs Williams, both living in
Pervolia and not being married to each other?
And what is the probability that Ewart may have written the paean to Ttooulis to boost his other half’s career prospects?
THE CROSSROADS of three continents, gateway of the EU to the Middle East, centre of international business and all-round centre of civilisation has found a new role for itself since the evacuation of the Lebanon began. The CyBC has described the plantation as a “centre of salvation” and a “rescue crossroads”, while one newspaper called it a “crossroads of salvation”. The best description was given by Haravghi’s front-page headline on Friday – “Reservation of refugees and decency”.
We just love being the centre of something or other. Phileftheros, panicking that we would lose our leading role, carried a front page article on Tuesday, accusing the evil Brits of trying to muscle in on our turf. It reported an “attempt to upgrade the role of the Bases and downgrade that of the Cyprus Republic, by the British.” It added that the Brits “tried to prevent the use of the airports and ports of Cyprus by foreign governments as they, on no account, want Nicosia to operate as a security link that unites Europe and the Middle East”.
But Phil should not have worried, as the government spokesman said the report was rubbish.
Only a complete idiot would think that any government would want to deprive us of the problem of being lumbered with thousands of evacuees with nowhere to go. All our EU partners have completely ignored our pleas to open their borders to the evacuees and help us out.
OUR GOVERNMENT is now worried, with some justification, about the possibility of being lumbered with tens of thousands of evacuees who it would have to house and feed indefinitely. Boasts about being a salvation centre and reservation of decency will have lost their gloss in a few days.
The evacuees who had high rip-off potential – those taxi-drivers could charge £20 for a 10-minute journey, kiosk owners could sell a litre of water for £3 – did not stay on the crossroads of salvation for more than a couple of days. They were on the first available flight out of here. We will end up hosting the evacuees, with zero rip-off potential, who will be stuck here because they have no money to pay for a flight.
The reservation of decency risks becoming the dumping centre of impoverished evacuees. This was exactly what the Israeli prime minister had in mind when he announced the opening of a “humanitarian corridor” between the Lebanon and Cyprus on Friday. The CyBC presented it, as if Olmert was doing us a great favour. Perhaps we should thanking for his plan to flatten Lebanon as this has put the plantation in the limelight.
NOW THAT Giorgos Lillikas has become foreign minister we will have plenty of diplomatic triumphs to celebrate. His first major victory was scored at the expense of the mighty US. If you remember, tough-guy Giorgos had told US assistant Under-Secretary of State Matt Bryza, that if he wanted a meeting while on the plantation, he should have extended his stay by one day. Bryza did so and Lillikas granted him an audience on Wednesday.
I am certain we will be hearing and reading plenty of stories about his diplomatic achievements. One such item appeared in Politis on Thursday. It quoted the intrepid Mega correspondent Michalis Ignatiou as saying that “Lillikas impressed Bryza”. How did Igantiou know? An associate of Bryza had apparently told him so.
But was this not a bit patronising? A lowly official – nothing more than a serving diplomat, passing judgment on a foreign minister is surely a breach of diplomatic protocol and I hope we will submit an official protest at the State Department.
