by XINHUA Bank of Cyprus (BOC) shareholders who became the bank’s owners against their will in 2013, endorsed plans on Thursday to increase its capital by 1 billion euros (1.32 billion U.S. dollars). The approval comes a few weeks ahead of stress tests planned EU wide by the European Banking Authority. The plan was passed by an overwhelming majority of over 87 percent of shareholders present, but turnout was low, just below 42 percent. The previous owners of the bank made an unsuccessful bid to block the increase of the capital. American billionaire investor Wilbur Ross and the European Bank of Reconstruction and Development have agreed to buy around 80 percent of 4.1 billion new shares worth 0.24 euro each in a private placement. The remaining 20 percent was set aside as “clawback” to be acquired by present shareholders prior to the introduction of Bank of Cyprus shares in the Cypriot and Greek Stock Exchanges some time before the end of the year. BOC’s CEO, Irish banker John Hourican told the shareholders’ meeting that the bank’s core tier 1 capital, now standing at 10.6 percent, will be raised to 15.1 percent after the new issue of stock. This, he said, will make the bank one of the strongest in the European Union. Hourican said strengthening the bank with new capital will allow it to accelerate its recovery and “engage with the wholesale markets more easily.” He had some good news for the shareholders, telling them the bank had a provisional profit of 81 million euros in the first half of 2014. It was the first profit posted by the bank since it was resolved at the start of the crisis in early 2013. Hourican said the capital issue will help materialize the biggest ever foreign investment in Cyprus and would also allow the bank quickly “engage effectively with borrowers.” “This deliberate strengthening of our capital position will allow us to accelerate the implementation of our restructuring ... and will provide us with improved funding options in order to normalize the Bank’s funding structure,” he added.
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