The board decision ends weeks of speculation and reports of conflict between the bank’s board and senior government, as well as Central Bank (CBC) officials on the way and speed with which the recapitalisation should take place.

“The bank announces that its board of directors has decided at today’s meeting to proceed with exploring investor interest for a potential capital increase,” a statement said.

“The Group’s management will engage directly with institutional investors. A possible capital transaction will be structured in a way that allows the opportunity for existing shareholders to participate,” it added.

The board decision was unanimous that also put to rest rumours of a split among directors.

The announcement followed a five-hour board meeting, which was held after the CBC issued an ultimatum telling the bank to confirm adherence to the originally agreed timeframe for a capital increase ahead of EU-wide stress tests of some 128 systemic banks in the Eurozone, all of which, bar the Bank of Cyprus, have ensured ample capital supply.

The ultimatum was prompted by the delay observed in taking a decision as current board members sought ways to prevent their share from being diluted.

It had been suggested that current shareholders were unhappy about the terms laid down by the central bank but reports earlier on Friday said that a compromise had been found during a morning meeting between CBC Governor Chrystalla Giorghadji, BoC chairman Christis Hassapis, as well as the bank’s CEO, John Hourican.

The Cyprus News Agency said the compromise foresees that existing shareholders and new investors will have a right to bid in the first stage of the process. An issue price will be set depending on the offers.

In a second stage, existing shareholders will be able to bid for up to 20% of the shares during an internal procedure.

The first stage is expected to kick off mid July and end on July 25. The whole process should end on August 8.

The board will re-convene an ad-hoc meeting to resolve upon the final terms of any capital transaction.

The terms of any capital transaction would be subject to the approval of shareholders at an extraordinary general meeting “that would be convened when as appropriate,” the bank statement said.

Following the completion of such a transaction, the bank intends to seek a re-listing of its entire ordinary share capital on both the Cyprus Stock Exchange and the Athens Exchange.

Source: Cyprus Mail