Bank of Cyprus Riding High, Many Depositors Left High and Dry

NICOSIA – Ten years after a near economic collapse of Cyprus and its financial institutions that required a 10-billion euro ($10.57 billion) international bail-out, the Bank of Cyprus may pay dividends again.

The bank was one of two which received a so-called “Bail-In” when President Nicos Anastasiades, reneging on campaign promises, allowed them to confiscate 47.5 percent of accounts with more than 100,000 euros ($105,725) that wiped out the life savings of some.

He promised to hold accountable bank managers who created the crisis with huge holdings in Greek bonds devalued 74 percent during that country’s economic disaster, and with bad loans to Greek businesses that didn’t pay.

But Anastasiades let it slide and the General Court of the European Union court ruled against the account holders seeking relief saying that having their money taken away didn’t demonstrate they were entitled to get it back.

Bank of Cyprus clients saw a percentage of their deposits exceeding 100,000 euros converted to equity, exchanging the seized funds for shares in the lender and it changed management.

Now the bank said it exceeded targets in 2022 as the COVID-19 pandemic began winding down and expects a good year in 2023, Chief Executive Officer Panicos Nicolaou told Reuters.

The bank, which is listed on the London Stock Exchange, says it intends to commence “meaningful” dividend distributions from 2023 onwards, subject to regulatory approval and market conditions, the news agency said.

“We have the wind in our sails. The guidance for 2023 is for a much better performance,” Nicolaou said of the big rebound a decade after it was nearly on the rocks and had to be saved.

Should approval be granted, it would be the first time Bank of Cyprus issued a dividend to shareholders since June 2011, for 2010. The bank posted a 139 percent preliminary after tax 2022 profit of 71 million euros ($75.06 million.)

The bank sold bad loans, quit East Europe markets and Russia, whose rich had extensive deposits on Cypriot banks and Nicolaou said it now had a clean balance balance sheet and was highly liquid.

“This is a new chapter for the bank. We had this high-NPE stigma on us but now its an entirely different situation,” said Nicolaou. “We have transformed the bank,” although it cost the depositors whose money was seized.


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