28/08/2018 17:18
Chairman of the Board of Directors of Bank of Cyprus Josef Ackermann announced his intention to step down from his position in 2019, speaking before the second Annual General Meeting (AGM) of the bank's Shareholders.
“I would like to inform you that I intend, if re-elected at today’s AGM, to step down from my position at the Boards of BOC Holdings and BOC Group at the next AGM in 2019”, he said. He also pointed out that almost four years after taking the position, major strides have already been made in restructuring the Bank and in formulating appropriate reform strategies and “it may thus be a suitable time to give an indication of my intentions, as part of the Bank’s prudent governance practices”.
He also said he was pleased that John Hourican has agreed to continue to serve for two additional years as BOC CEO.
Cooperative Bank’s crisis threatened the stability of the whole Cypriot banking system
Ackermann also pointed out that Cyprus’ financial system experienced a major turbulence during the first seven months of 2018, threatening not only all stakeholders of the second largest commercial bank in the country, but also, the stability of the Cypriot banking system as a whole. He said that he was pleased that the authorities and Parliament took the necessary policy actions to restore calm and stability.
As he said the resolution of the crisis with the Cyprus Cooperative Bank was associated with a major enhancement of the existing legislative framework for bank loan foreclosures, insolvency, and loan sales and with the introduction of new legislation on loan securitization.
“These changes are welcome as they bring the Cypriot legal framework closer to the best practices in Europe by strengthening in a balanced way the incentives for both borrowers and lenders to reach mutually beneficial restructuring arrangements, while also allowing for efficiency gains and faster NPE reduction through loan sales”, he said.
At the same time he noted that these legal reforms would not compromise the rights of bank borrowers, but they were accompanied by a new government initiative under Project Estia to support vulnerable low-income borrowers.
Many challenges remain
Ackerman referred to the progress achieved across a number of fronts by the Bank, noting however that the work of the Board and Executive Management is not finished, as many challenges remain.
Among others, he referred to the Groups strategy of accelerating further the reduction of balance sheet risk through a major reduction of NPEs, to enhance further its corporate governance and on providing quick, effective and well-considered guidance to the executive team in addressing the operational and strategic challenges facing the Bank.
The Board, he added, has remained committed to ensuring full compliance with the strictest governance requirements of the three countries of jurisdiction of BOC Holdings and is also fully compliant with all US and other international sanctions.
“ In this context, as you may know already, I stepped down from my position as an independent member of the board of Renova, a company covered by the US sanctions, a few days after the sanctions were announced”, he said.
He also stressed that the Board and the Executive Management team have been promoting and instilling within the BOC Group and its staff a set of values and high principles, as no tolerance for any form of financial crime, strict adherence to the compliance requirements, respect and promotion of the clients’ interests, and recognition and appreciation of the valuable contribution to the work of the BOC Group by each one of its employees.
Ackermann further said that the BOC Group was still facing major challenges, which they were determined to continue to confront decisively, as the need to reduce even further our NPEs, refine further the Bank’s business model, contain the cost structure, optimize the funding structure, and modernize further the operations.
“My Board colleagues and I remain committed to serving the needs of the Cypriot economy and enhancing the value of BOC Holdings over the medium term to its shareholders and other stakeholders”, he said.
Hourican: A good progress but still a lot to do
In his speech the Bank’s CEO John Patrick Hourican said that the Banks has made good progress since its recapitalisation in 2014 but there was still a lot to do before “we can regard the Bank as normalised in a European context”. As he said, ensuring the bank has strong financial foundations was an essential prerequisite to building a future-focused and customer-centric business.
As he said, the Group’s Balance sheet is €9bn smaller now than it was in 2013.
“We have deleveraged through selling off non-core operations in Russia, Ukraine, Romania and other jurisdictions and through reducing the stock of Non-performing loans. Today Bank of Cyprus has its capital-base fully focused on serving the Cypriot economy and maintaining its position as the number one bank in the country”, he said.
He added that in a four-year period, they have reduced the non-performing loan stock by €10bn to €5.2bn. He added that the €2.8bn portfolio sale they announced on Tuesday brings important new active capital to Cyprus.
“The reduction in our NPL stock is equivalent to c.60% of Cyprus GDP and it has all been delivered without state-aid”, he stressed.
He also referred to the strong liquidity position of the bank, saying that the bank carries significant surplus liquidity and is compliant will all European and local regulatory ratios.
He added that the Bank has adequate capital despite rising capital requirements across the industry, reasonable level of core operating profitability and “in-progress” plans to modernise its customer proposition.
“That said, we still have more to do before we can declare any form of victory on the Bank’s repair” , said Hourican.
He added that a key objective over the coming quarters would be to develop an efficient business model with a focus on sustaining revenues while at the same time reducing costs and managing labour relations.
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