February 13, 2007

Defenceless City...

Is the Bank of Cyprus, according to the Central Bank Governor.

It is defenceless because the institutional investors from London have been allowed to buy up to 30% of its shares whereas the Directors of the Bank just talk and do not do anything to prevent these developments. In fact, the directors should start buying rather than let the foreign investors accumulate such high stakes that will eventually allow the sale of the bank to foreigners.

It is not clear what instigated this attack by the governor. It is probably the first time in an EU country that a central bank governor accuses the directors of a bank for not somehow preventing the sale of shares to "foreigners". Preventing such sales or buying these shares on behalf of the bank is either impossible (OK, say quite difficult) or illegal or both. That is besides the point, probably.

Interestingly, it just so happens that in 2007 the decision as to who will take over at the central bank is being taken (by TeePee if you are wondering). My hypothesis for the cause of this outburst is that either the central bank governor wants to be re-appointed (giving us some clues to TeePee's position on the issue of bank sales to foreigners) or, failing that, wants to jump to the hierarchy of the Hellenic Bank bandwagon, the true national bank champion.

Any alternative, sensible hypotheses are welcome...

10 Comments:

Anonymous Anonymous said...

How about ignorance as a plausible explanation? He is probably more incompetent than scheming....

13 February, 2007 18:20  
Blogger apodimos Kypreos said...

Actually, you should not underestimate him. He has a lot of experience and his tenure as a central bank governor, with only minor hiccups, has been pretty good. You cannot say that he made this and this mistake. People were worried about devaluation for instance, and the central bank got it right that, if aything, it is a revaluation that is needed. Which makes the way and time he intervened on this issue all the more suspicious actually.

13 February, 2007 21:17  
Anonymous Anonymous said...

if you are looking for an alternative hypothesis I suggest you look more closely at Disy plans for a presidential candidate.

Mother Theresa 2.0 has bigger plans than you may think

14 February, 2007 10:52  
Blogger apodimos Kypreos said...

Actually, I thought about that this morning. So he might have political ambitions beyond our imaginations. He has been minister of finance and interior, central bank governor so the only thing he would really be satisfied with from now on is the Presidency. I do not find that either strange, or illogical or immoral in any way. He has actually performed really well in these positions so he might harbour grandiose plans of his own. The problem is, these positions were positions he has been appointed at. Even though he did a good job (compared to what is out there), I somehow have trouble believing that he has the charisma to actually be elected in ANY position. That does not mean he might not want to try.

14 February, 2007 11:02  
Blogger Illantros (Ιλλαντρος) said...

To anonymous: DHSY already has a candidate. But he would be a good option for the Patriotic Front (EYRWKO, ADHK, KEP, and various other patriotic acronyms).

To apodimos: Hellenic? You think Ttooulis pou t' Afkorou would settle for the THIRD largest banking establishment? How about jumping ship to the Bank of Cyprus itself? Who better to protect the establishment's darling?

14 February, 2007 11:03  
Blogger apodimos Kypreos said...

I know Hellenic comes third but BoC I have a feeling is a lost cause. He has pissed them off too much and maybe those institutional investors from London might not be too keen to appoint a retiree as CEO. Whereas convincing just the ArchBishop is so much easier... Who knows, he might even show up in Tommy 2.0's next dream in an attempt to force the issue...

14 February, 2007 11:07  
Anonymous Anonymous said...

Remember the scandal with the national banking examinations where HE decided that the only 'college' eligible to provide tuition was his daughters??!! All new bank employees had to(and still have) pay a fee to the governors daughter. ... oute sto ouzmbekistan reee... btw in previous years colleges ( normal ones) provided this service ...Not actually a good moral performance

14 February, 2007 13:01  
Blogger apodimos Kypreos said...

Minor hiccup.

Did not really prevent the colleges from providing it.

Smells bad but that is what happens when institutions do not work.

In this case the Competition Commission should have investigated and should not have allowed ownership of the company by his daughter. But in Stravaraland a koumparos from Liopetri or Avgorou could also have done the job so hard to see how this could have been effectively stopped. Sorry to disappoint you...

14 February, 2007 13:27  
Anonymous m said...

Oxymoron: Being an EU member and wanting to "protect your banks from foreigners"...

14 February, 2007 13:40  
Blogger apodimos Kypreos said...

Agree. To summarize, I think we agree with m and have 3 possible motives for the show of public indignation:

(i) Re-appointment potential (apparently tenure ends in April according to Stockwatch).

(ii) Appointment to one of the other banks (my guess is that Hellenic is the easiest transfer but if he can have BoC he will take it hands down)

(iii) Further political ambitions as a Presidential candidate.

14 February, 2007 13:57  

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