BOC’s world class board and book value attractive to investors, Hourican says (Update)

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By Stelios Orphanides

Investors should invest in Bank of Cyprus because its attractive share value and its board of directors that includes bankers, such as US billionaire Wilbur Ross who helped restructure Bank of Ireland and former Deutsch Bank boss Josef Ackermann, which guarantees “world class” governance, John Hourican, chief executive officer of Bank of Cyprus said.

“You should invest because we have people like Wilbur and Jo and others in our board,” he said in a Reuters interview.

“We have governance standards through that board that will match anyone else and any other investment across the world,” he said. “That is a statement of intent of the quality that we want to have in the business we are trying to run”.

The lender’s CEO said that as the Bank of Cyprus is attractive to investors as it can boast “a clear track record of deleveraging and actually doing what we said we would do, a set of governance standards that are put in place that are world class”.

The bank is staging non-dealing roadshows this week ahead of its relisting at the Cyprus Stock Exchange and Athens Exchange this month and “is well capitalised”.

“We are not say come and overpay for the stock we say come in and ride this back to value,” he said. “We moved the story from where this bank survived to what it is worth and we are doing that step by step, piece by piece, bringing back liquidity, bringing back capital, to strengthen the core Cyprus business where we have a strong market position”.

Hourican added that while the size of debt in the euro area and Cyprus is important what matters more for its repayment is the creation of income.

“When you have debt you have to pay it back,” Hourican said in an other part of the Reuters interview. “If you have to pay it back you have to create earnings. We can’t say debt doesn’t matter but all we have to say that you have to create growth prosperity and confidence such that you can create the cash flows for the repayment of debt”.

Last year, Cyprus’s private sector debt, posted 62.5 billion euros of debt equivalent to 344.8 per cent of the gross domestic product, which was the euro area’s second highest after Luxembourg, according to Eurostat.

As member states in the euro area share the same monetary policy, each of them still has a “different fiscal policy, different regimes of government spending, different regimes of cultural behaviour but you have to repay that when you borrow it,” he said. “I am a bank, I take your savings I transform them into capital consumption, I allow you to consume your future earnings”.

Hourican added that the Cypriot economy was able to beat all troika forecasts so far while Cyprus’s forecast return to growth next year “is one the fastest and most nimble recovery in the Eurozone”.

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Stelios Orphanides is a journalist at CyprusBusinessMail.com. To contact Stelios Orphanides: [email protected]

  • Barry D Fraser

    So in reality, squeezing the private sector salaries is not the way to go if you want people to pay what their debts. I think I like what this guy is saying.

    • Pc

      He actually says little. He just says, we need to create earnings. There is no advice on how to best do that. It could be through investments by borrowing, it could be through cutting costs, it could be through innovation, it could be all of that. Everyone, from left to right, can read into his message what they want to read into it. Clever wording 🙂

      • GSP

        Or we could create earnings by raiding bank accounts of those who are not ‘in the know’ therefore still have money here in Cyprus banks.

        • Pc

          That’s not creating earnings. That is called a wealth transfer 🙂

  • Себастьян Returns

    “”Cyprus’s forecast return to growth next year “is one the fastest and most nimble recovery in the Eurozone””…

    Excellent !

    • divadi bear

      C Returns
      It looks good here in print ! But will it really become a reality ?
      Time will tell, but as many say: “don’t hold your breath !”.

      • Себастьян Returns

        Maybe they refer to the advent calendar ?..

        or the Zoroastrian calendar ?

  • Bystander

    I wish he is right with his forecasts for recovery!

  • Себастьян Returns

    “”a clear track record””…

    but not for what you are claiming – rather the opposite.

  • Barry White

    Blah, Blah John. Sorry but until Depositors’ money in BOC is freed for them to do with as they please, you and your colleagues are really glorified Dole Bludgers. Show us the money and then decisions can be made if BOC is a trusted financial institution by those that actually matter

  • Rory Keelan

    “When you have debt you have to pay it back,” Hourican said . If only his borrowers agreed!

  • konstabo

    we need to create earnings in order to pay debts….brilliant…..i would have never thought of that , your money is secure with us because we can always haircut our customers to pay for any fudge up we might make….they even passed new laws in the EU , that taking your money to pay for our

    fudge up was ok and that we would not be liable , because your money is actually our money….ha ha….

  • Michael

    I like his optimism (or, put another way, salesman’s pitch), but all those investors including Wilbur Ross might be in for a number of nasty surprises. They just have no idea what lengths the “establishment” is capable of going to in order to protect its interests. Remember that list of companies that owe BoC billions in NPLs? (why do you think the MPs are so busy sabotaging the foreclosures legislation?) How is sorting out of these NPLs going? Any luck with these, Mr Hourican? Oh, and have those Laiki employees forced on BoC been let go yet?