III. Popular Savings Bank of Limassol to Laiki Bank 1901-2013: A Timeline of Significant Developments
1901 Four leading citizens - Agathoclis Francoudis, Ioannis Kyriakides, Christodoulos Sozos and Neoklis Ioannides establish the Popular Savings Bank of Limassol
1924 changes name to Popular Bank of Limassol. The bank also became the first company in Cyprus to register as a public-traded company.
1967 changes name to Cyprus Popular Bank
1969 establishes branches in Nicosia and Famagusta
1970 establishes branches in Paphos and Larnaca
1970, UK Midland Bank acquires 22% of the company's shares, making Midland a major shareholder in CPB.
1971 relocates headquarters from Limassol to Nicosia.
1974 establishes first London branch.
1983 acquires all the Cyprus operations of Grindlays Bank (which had acquired Cyprus operations of the Ottoman Bank in 1969)
1992 opens the first branch of European Popular Bank in Athens with 58% of the shares of the bank; other shareholders included HSBC (formerly Midland Bank) and Greek and Cypriot investors.
1995-8 opens offices in South Africa, Canada, Australia, New York,
1997 opens its first representative offices in Serbia and in Russia
2000 changes name to Laiki Group after suffering reputational damage as a result of its involvement in the illegal transfer of billions of dollars to Cyprus during the 1990s United Nations embargo against Yugoslavia.
2001 establishes a subsidiary in Australia with five branches.
2002 UN war crimes tribunal at the Hague reveals that money that flowed through front companies with accounts in Laiki bank were used to buy weapons, raw materials, spare parts and fuel and equipment for the Milosevic government to pursue wars in Bosnia in 1992-95 and Kosovo in 1998-99. Chair of Laiki, Mr Lazarides, repeatedly denies any wrongdoing by the bank. (Hope FT 19 July 2006)
2005 The Group established Laiki Bank Guernsey and purchased Serbian Centrobank
2006 sale of HSBC's (formerly Midland Bank) 21.8 per cent stake in Laiki to Marfin Investment Group and Tosca, a London-based hedge fund, and to Laiki employees for C£120m ($219m), a 23 per cent discount to Laiki’s market price on the Nicosia stock exchange.
Laiki is now ‘one of the biggest banks in Cyprus and offers retail banking as well as private banking for
wealthy individuals’ FT Croft 12 January 2006 http://www.ft.com/cms/s/0/ce9597e0-830f-11da-ac1f-0000779e2340.html#axzz2QidirR4l
March 2006 George Jacovou, the Cyprus foreign minister, claims a joint investigation by the Cyprus and
Serbian central banks has cleared the Greek Cypriot authorities of involvement in laundering Serbian money. The Serbian central bank denies it had taken part in the investigation. FT Hope 6 June
2006 http://www.ft.com/cms/s/0/72149862-f4f8-11da-86f6-0000779e2340.html#axzz2QidirR4l
June 18 2006 Kikis Lazarides, the long-serving chairman of Laiki Bank, resigns following a move by Marfin Investment Group to increase its stake in Laiki to 20 per cent and take over its management assets of €13bn ($16.2bn).
Marfin also acquires 100 per cent of Laiki Bank Greece, the Cypriot bank’s unlisted Greek subsidiary with a network of almost 80 branches and assets of €3bn. MIG also takes control of Egnatia Bank, a private bank with assets of €3.3bn that has a strong branch network in northern Greece, by acquiring the stake held by the Theoharakis group, a founding shareholder. FT Hope 19 June 2006. Marfin buys Tosca's 8 per cent stake in Laiki
6 June 2006 Serbia's former justice minister, Vladan Batic, accuses Laiki bank as conduit for Milosevic billions (€3bn) which were deposited in accounts of "front" companies held by Cyprus Popular Bank. He alleges these were set up by the law office of Tassos Papadopoulos, president of Cyprus in 2006.
The allegations are made in a court case in Nicosia for damages for conspiracy to defraud brought against
Laiki Bank by a Yugoslav businessman. FT Hope 6 June 2006 http://www.ft.com/cms/s/0/72149862-f4f8-11da-86f6-0000779e2340.html#axzz2QidirR4l
1 November 2006 Laiki makes an all-paper reverse takeover offer for 100 per cent of Marfin, a fast-growing Greek banking group and its subsidiary, Egnatia Bank. Dubai Investment acquires a 15 per cent stake in the new bank. The deal is put together by Marfin and the Lanitis family, Laiki’s other major shareholder.
Laiki is chosen as the vehicle for the new group due to the attraction of Cyprus’s bank takeover legislation compared to that of Greece which requires bidders to make a 100% cash offer for a target company’s shares. The differential between corporation tax of 10% in Cyprus and 25% in Greece also plays a role in the location of the company in Cyprus.
The bank to be based in Cyprus but its management is based in Greece initially.
Marfin replaces chair Kikis Lazarides and several board members who had been linked with the illegal transfer billions of dollars from Serbia by governments headed by the late Slobodan Milosevic. (FT Hope 1 November 2006 and 19 December 2006).
Changes name to Marfin Popular Bank
Marfin Group consolidates Egnatia, Laiki and Marfin to form Marfin Egnatia Bank, which is the 95%-owned Greek subsidiary of Marfin Popular Bank.
21 November 2006 Kikis Lazarides, former chair of Laiki bank tells a Nicosia courtroom that he had no knowledge of Serbian money from Slobodan Milosevic flowing through his bank.
He said, "As the chief executive, I was concerned with strategic operations. I wouldn't be informed about details of cash transfers as long as the procedures were correctly followed."
Mr Lazarides also informs the court that he "could not recall" details of the UN investigation into the bank’s role in cash transfers from Belgrade.
The court was read testimony from a former assistant manager at the bank’s Larnaca branch who with colleagues and officials from the Cyprus subsidiary of the Serbian bank, Beogradska Banka, counted cash deposits exceeding DM500m delivered to the bank by Yugoslav couriers in 1998-1999 (FT Hope 21 November 2006)
http://www.ft.com/cms/s/0/65917cae-7905-11db-8743-0000779e2340.html#axzz2QidirR4l
December 2006 Laiki announces doubled profits of €130m for the first nine months of 2006 after a lean period caused by provisioning for bad loans and the collapse of stock market prices.
January 2007 Marfin PB bids for Piraeus Bank. Piraeus Bank makes a counter-offer for Marfin PB. The deal is blocked at both ends by regulators in Greece and Cyprus.
June 2007 Marfin Investment Group plans to raise €5.2bn ($7bn) of new capital to fund an ambitious acquisition strategy. Chief Executive of Marfin Popular Bank, Andreas Vgenopoulos, is thought to be investing €50m of his own money in the share issue. (FT Arnold and Hope 18 June 2007).
2007 Laiki acquires 50% of the share capital of AS SBM Pank, a bank in Estonia, 99% of the shares of Marine Transport Bank Ukraine and 43% of the share capital of Lombard Bank Malta
2008 completes acquisition of 50% of the shares of CJSC RPB Holding, parent company of the Rossisysky Promishlenny Bank (Rosprombank)
December 2008 Laiki Bank in the UK offers two of the top five savings products – a one year and six month fixed bonds paying interest of 5.47% and 5.3% respectively (FT Warwick-Ching18 December 2013)
March 2009 a joint Greek and Cypriot regulator inspection concludes that the bank is undertaking risks whose level and nature provoke concerns
2010 Greek special inquiry into Marfin bank loans to Vatopedi monks near Mount Athos Greece
April 2010 Greek government debt downgraded to junk bond status
2 May 2010 first Greek bailout agreed
2010 Laiki sells 85% stake of 10-branch Laiki Bank Australia to Bank of Beirut.
End 2010 Profit €87.1 million (2010)
Total assets €42.58 billion (end 2010)
Total equity €3.641 billion (end 2010)
Employees 9,000 (2010) (Wikipedia)
31 March 2011 Restructures of Greek operations at Marfin Egnatia Bank from a subsidiary based and regulated in Greece to a branch based in and regulated in Cyprus
The Central Bank of Cyprus requires MPB to hold €1.56bn of additional capital against its sovereign bond portfolio and €2.1bn
Sept 2011 starts to draw down Emergency Liquidity Assistance through Central Bank of Cyprus which reaches €9.8bn by 2012
October 2011 second Greek bailout agreed with haircut of 53.5% face value loss on Greek government bonds held by private creditors (the so-called Private Sector Initiative- PSI) The bank losses from the haircut are €2.5bn.
Nov 2011 Vgenopoulos quits as Marfin bank chair
5 Dec 2011 Efthimios Bouloutas resigns as CEO. Replaced by Christos Stylianides.
Bouloutas gets financial package of €1,543,000 with the amount of
€ 941.000 (€ 689.000 net of tax), paid in accordance with the provisions of Greek Labour Law. (See Annual Financial Statement 2011). His salary and other short-term benefits as Chief Executive was €1,083,000 gross p.122.
2011 Laiki sells majority of its shareholding in its Estonian bank
2011 Laiki renamed Cyprus Popular Bank . Announces loss €4.1 billion for year
2011 Credit committees merged.
2011 Directors make loans of €400m to themselves and their connected people
April 2012 Orphanides term at Central Bank of Cyprus finishes and not renewed. Panicos Demetriades appointed governor.
April 2012 Annual Financial Statement reveals loss in 2011 of €3.646bn p.20 Customer deposits had fallen by approximately 20% from €25.5bn to €20.1bn and €10.3bn of liabilities was owed to ‘other banks’ (slightly down on 2010 figure of €10.6bn) p.22.
In Note 31 (p.68) we learn that obligations to Central Banks were €9.292bn in 2011, up from €6.945bn in 2010.
Of the total due to other banks of €10.3bn at the end of 2011 €6.476 was owed in Cyprus – massively up from €2.915 in 2010 – whilst €3.783 was owed in Greece – massively down from €7.509 in 2010 (see p.68).
30 June 2012 Cypriot state bails out Laiki with €1.8bn share purchase that gives it a 84% holding in the bank. Seven new directors appointed . Michalis Sarris appointed as non-executive chair.
Plans drawn up to sell assets, cut costs and recapitalise the bank while ring-fencing its increasingly troublesome Greek operations.
July 2012 Cyprus EU presidency starts
Late 2012? European Central Bank informed the Cyprus Central Bank that it would not accept the share capital bought by the Cypriot state for €1.8bn as collateral against Emergency Liquidity Assistance.
Q4 2012 Laiki announces €1.8 billion loss before tax in the first nine months of 2012
Dec 31 2012 Cyprus EU presidency ends
February 2013 Presidential Elections: Anastasiades elected President.
Early 2013 renames Greek operations CPB Bank with branch network of 183 and includes the wholly owned subsidiary Investment Bank of Greece with offices in Athens, Thessaloniki, Chios and Crete
15th March 2013 Negotiations for bailout come to a head
18th March 2013Parliament rejects first bailout
March 25 2013 Second bailout finalised
On 26 March 2013 Enforced sale of Greek branch network and operations to Piraeus Bank.
March 27th 2013 the board members informed by the Central Bank of Cyprus that they are to be dismissed and replaced by a special administrator to wind down the bank.
Sources: Wikipedia: CPB Bank and Cyprus Popular Bank, Investment Bank of Greece website (19 April 2013) Group, Financial Times, Reuters and my web pages
(c) Fergus Murray May 2014