Church raising cash to maintain majority stake in Hellenic

Stefanos Evripidou – August 2013

Cyprus

THE CHURCH is prepared to sell off prime real estate to raise the necessary cash to maintain its majority stake in Hellenic Bank, said Archbishop Chrysostomos II yesterday.

In an interview with online financial news site Stockwatch, the Primate acknowledged that keeping the Church’s majority shares in the bank would not be easy but that “with persistence and patience it shall be achieved”.

According to sources, Hellenic Bank needs under €300m to meet its Core Tier 1 capital ratio obligations, which it hopes to find through its own sources.

However, if it fails, the government has been given permission from its international lenders to lend the cooperative movement and Hellenic Bank up to €2.5 billion of the €10 billion borrowed from the EU and IMF.

As things stand, it seems the co-op movement will be taking €1.5 billion of that amount, making it virtually state-owned, while Hellenic will possibly try to raise the money by increasing its share capital, potentially diluting the Church’s majority stake in the bank.

Following the ongoing economic crisis, near bankruptcy of the state in mid-March and the Eurogroup’s subsequent decision to wind down Laiki Bank and ‘bail-in’ Bank of Cyprus(BoC), the Church has been losing around €3 million a year in lost dividends from the island’s three major banks, said the archbishop.

This in turn has created a liquidity problem for the holy leadership preventing it from being able to participate in the recapitalisation of Hellenic Bank, said the Primate.

To find the money, the Church will try to borrow from investors or Russian tycoons. If that doesn’t work, it will sell prime real estate, he said.

The church leader said he expected developments in the coming weeks regarding foreign investors, mainly from Russia, who, he claimed, are interested in participating in the share capital of Hellenic and the purchase of church land.

Meanwhile, the head of the Church said he was in discussions with several investment funds abroad and with Russian tycoons to secure a loan of €100m.

“If this effort bears fruit, it will prevent the sale of church property and the amount secured by loan will be channelled into the recapitalisation of Hellenic Bank,” said Chrysostomos.

The no-nonsense, business-minded Primate said he also wanted to see a 15 per cent reduction in salaries at the bank.

Chrysostomos described Hellenic’s voluntary retirement scheme which has saved the lender some 14 per cent in operational costs, as a good measure but not enough.

“I will call on the bank’s board to proceed with a reduction in staff salaries by 15 per cent and request an ad hoc board meeting to discuss how the group is progressing,” he said.

The Archbishop said he recently met President Nicos Anastasiades and Central Bank of Cyprus (CBC) Governor Panicos Demetriades to tell them to work together “to get the economy and banking system out of the deadlock it’s in”.

He also called for a reduction in lending rates, no further taxes and development projects to reduce unemployment.

“We must not leave people to the mercy of God,” he said, warning against selling off people’s first residence when trying to claw back non-performing loans.

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