NICOSIA, July 5 (Xinhua): Bank of Cyprus (BOC) shareholders approved on Friday a Central Bank of Cyprus plan to bolster its capital by 1.0 billion euros, ahead of EU-wide stress tests of member states banks.
Current shareholders of the bank are former depositors who had their deposits slashed by 47.5 per cent in the world's first bail-in dictated by the Eurogroup and the International Monetary Fund in a 2013 10-billion euro bailout for Cyprus.
The decision to recapitalise the bank anew came after a 5-hour long meeting of BOC's Board of Directors, which was preceded by a long meeting with Central Bank of Cyprus governor Chrystalla Georghadji.
The governor had set an ultimatum to the Board to reach a decision by the end of Friday, saying in a letter to the Board that "strengthening the bank's capital base was deemed necessary by the Central Bank, both in light of the upcoming results of the ongoing stress tests (by the European Banking Authority), and in order to satisfy a term in the troika Memorandum of Understanding".
A sticking point was a provision set by Georghadji for a 20 per cent crawlback for shareholders, meaning that current holders of BOC's stock could not claim more than 20 per cent of the total of the issue, but even this percentage would not be guaranteed.
A compromise was struck at Friday's meeting between the BOC's board and Georghadji under which the process of bolstering the lender's capital will be in two stages, the first one starting by the middle of this month.
At this stage, both new investors and current shareholders can bid for the new stock, with all prospective investors bidding above the opening price considered eligible to participate in the second stage of selection.
Priority will then be given to current shareholders to obtain up to 20 per cent of the fresh shares.
Bank of Cyprus approves 1.0b euros recapitalisation plan
FE Team | Published: July 06, 2014 00:00:00 | Updated: November 30, 2026 06:01:00
Share if you like