Hourican resigns citing personal reasons (Update-4)

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(Adds more comment by a bank source in 13th paragraph and additional background)

By Stelios Orphanides

Bank of Cyprus chief executive officer John Hourican has submitted his resignation, citing personal reasons, the bank said today. He has given four months’ notice to give the bank time to find a replacement.

“The board of directors of Bank of Cyprus Public Company Ltd announces that the group chief executive officer, John Patrick Hourican, has submitted his notice of resignation, effective in four months,” Bank of Cyprus said in statement. As per his employment contract, Hourican has a contractual notice period of four months but he remains at the disposal of the board of directors. Hourican’s decision to leave the group is a personal one and he intends to relocate to his home country, Ireland”.

Hourican joined the bank in October 2013, seven months after Cyprus’s banking crisis and chaotic bailout. He worked at the Royal Bank of Scotland until February 2013. He played a key role in Bank of Cyprus’s €1bn capital issue last August which attracted US investor Wilbur Ross. Hourican also oversaw the relisting of the bank at the Cyprus Stock Exchange and Athens Exchange in December. Its share had been suspended in March 2013.

Hourican is also considered responsible for arranging the appointment of former Deutsche Bank boss Josef Ackermann as chairman of the bank.

The board “will discuss in due course issues arising from the resignation,” including his succession, the bank statement said. “The Bank’s strategy will continue to be implemented by the management team, under the guidance of the board of directors”.

In a separate statement, Bank of Cyprus said that Hourican’s decision to step down from his position has to do with his intention “to spend more time with his young family” and not “to take up another role elsewhere.”

“I have been very proud to be part of the Bank of Cyprus family during this period and to have led this chapter in the bank’s rehabilitation,” Hourican said in a statement. “It has been an honour to work with so many talented people and to play my part in laying the foundations for a better bank to serve the Cypriot economy into the future”.

Ackermann expressed his thanks to Hourican as well as his “appreciation for the remarkable progress achieved” under his leadership.

“He leaves behind a strong management team and a bank in a steadily improving financial shape, with restored employee, investor and customer confidence,” Ackermann said. “We wish him all the best in his future endeavours and we are looking forward to continuing to work with him in the months ahead.”

The lender said that “on his departure from the bank, Hourican will have spent nearly two years in Cyprus and led the Bank during an extraordinarily difficult chapter in its history. Today the bank is much better positioned to serve its customers, to offer opportunity to its employees and to create returns for its shareholders”.

Under the terms of Cyprus’s bailout, Bank of Cyprus merged with the failed lender Cyprus Popular Bank, also known as Laiki. Depositors at Bank of Cyprus saw almost half of their uninsured deposits turned into equity while those at Laiki lost all their deposits in excess of €100,000.

The lender’s share at the Cyprus Stock Exchange opened at €0.213 by 12:32 it fell to €0.208, 2.8 per cent compared with yesterday’s closing.

According to a person familiar with the situation who spoke to the Cyprus Business Mail on condition of anonymity, the lender is expected to go “head-hunting” in search for a replacement for the Irishman.

Under Hourican, the bank, which last year saw its non-performing loan ratio rise to 60 per cent of its overall loan portfolio and posted a €261m after tax loss, followed a “shrink to strength strategy,” which included the divestment of its non-core business abroad. These include its operations in Ukraine, its stake in Banca Transilvania, loans in Serbia, and the majority of Laiki’s loan portfolio in the UK. The disposal of its Russian unit Uniastrum Bank, a top priority of the bank, is still pending.

The lender managed to repay to the European Central Bank more than €2.5bn in emergency liquidity it inherited from Laiki.

The Irish banker did not fear controversy and with his no-nonsense approach he sought to tackle the lender’s non-performing loans by pressuring major Cypriot developers not servicing their loans to sell assets to pay their dues. He did not hesitate to clash with Ackermann’s predecessor, Christis Hassapis, over the bank’s strategy.

In February, Hourican drew fire from opposition parties over comments he made in an internal email that was leaked. In the email he criticised politicians for the “bemusing politicisation of the insolvency law”. Days later, a car owned by the bank and used by the Hourcan family, was destroyed by fire. Police suspected an arson attack. Holders of capital securities who saw their investment wiped out in March 2013 were angry with Hourican’s decision not to compensate them for their losses. They organised demonstrations outside the BoC headquarters on several occasions, which sometimes turned violent.

“Hourican couldn’t care less about criticism,” the source said and acknowledged that the timing of the decision — days after the parliament passed the insolvency legislation and ended the suspension of the foreclosures law, which practically allows Cyprus’s economic reform programme to continue– “was very bad”.

The funding from the ECB in the form of emergency liquidity assistance “has been dramatically reduced, and, importantly, €1bn of fresh equity has been raised to ensure that the bank is well capitalized amongst its European peers,” the lender said. “These initiatives will continue under the strong management team in place under the guidance of the new board of directors for the benefit of the bank’s depositors and borrowers and of the Cypriot economy in general”.

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About Author

Stelios Orphanides is a journalist at CyprusBusinessMail.com. To contact Stelios Orphanides: stelios@cyprus-mail.com

  • Road Warrior

    I’m surprised he’s stuck it so long, any thoughts on his replacement, Cypriot/Greek, Koumbare of one of the usual suspects ? Expect brown envelope overdrive !

    • A.Papas

      I’m surprised you’ve stuck it for so long, have you been receiving brown envelopes?

      • Argent

        No, hes not Cypriot.

    • Mist

      Pancho Villa perhaps, he knows how to deal with the federalies and other banditos in the Banana Republic, ándale

  • disqus_ZPlOdQqScB

    Disaster worst news ever! Obviously “This bill” is useless!

    • Alexander Reuterswärd

      It will be very interesting to see how the BoC shares perform today

  • Alexander Reuterswärd

    Sad news for Cyprus, but who can blame him…obstacles to perform his job from the board and the government.

    • Pc

      In the last 6 months, he had the board he wanted.

      • Alexander Reuterswärd

        or thought he wanted?

  • disqus_qVKPczqCH5

    Thats a pity. He was a good man for the job. His replacement can only be worse.

    • Didier Ouzaid

      Once his wages are all back on his home bank account, if they were ever within the BoC that is.

    • Mike-H

      Good men do not last long in Cyprus.

      • All is good…

        Leading statement ?.. or chip pan fire ?

  • costas

    the return of the I can’t be bothered hub

  • n3wbi3

    THE ONLY ONE WHO HAD BIG ENOUGH BALLS TO STAND BY POLICIES AND NOT GIVE TO ‘BIG CYPRIOT’ NAMES….EVEN THREW SOME OUT OF HIS OFFICE!

  • JSReturnsAgain

    Like everything on the island.; A quick coat of paint, a promise or a new manager does not work. The island has to change FUNDEMENTALLY for any recovery to begin. BoC et al should have been closed down in 2013 to show the world we mean to change. Like Greece, we are still heading for the rocks and some of the crew appear to be abandoning ship. I think the personal reasons Mr Hourican is citing is the fact that he has a conscience, common sense and appears to be honourable and doesn’t want another bank failure on his CV.

  • All is good…

    Anyone surprised by this little titbit of news ?

  • Bail in 2.0 is on the horizon perhaps. Regardless of speculation this doesn’t bode well.

  • Big C

    I guess he knows things that we as yet do not. Ah…. the good old personal reasons story.

    Is it an impossible task to steer BOC back? There is still the Laiki legacy to deal with, the massive NPLs and now with the foreclosure bill finally passed, does this mean BOC must start the process of heavy write-downs?

    Then there is the issue of developer mortgages and the outcome of the task force. Owners have paid and likely they would take matters to the ECJ if banks demanded more money from them. In truth ……. more write-downs.

    More capital needed, new stress tests……. oh dear

  • Pc

    Please don’t hire a Cypriot or Greek to replace him…

    • Argent

      I hope they do, because we all know what will then happen.

  • almostbroke

    The “Irishman abroad” swimming with sharks ! probably dident realise the fiefdom is run for the personal benefit of the “rich and elite” and the ordinary criteria relating to banks and banking do not apply in the fifedom

  • Andreas Louca

    the timing . Are there things about to happen , Is the banking sector safe , or are we going to have another run of depositors funds. If the foreclosure bill has any teeth , then we are in for some rough times, and a wake up call to reality, and higher unemployment , The banking sector
    will have a write down on its balance sheet, and will there be an knock on effect to re capitalisation . It would appear these are no good times for Cyprus , but may be the adrakest hours are before dawn .. A new dawn for Cyprus , where contracts are honoured , and guarantors live up to thirir word , where shop keepers and the tourist sector do not try to rip of the public in drive to get rich fast, where all public representatives , in Parliament, and Government bodies can be trusted to think of the Country first ,

    • All is good…

      I hope you are right.

  • Bystander

    “I am fed up” would be more appropriate. Although this is also “personal reason”.

  • Barry White

    Cue the cousins by the dozens lining up for the job.

    • All is good…

      Cue or Queue – both work well.

      They’ll all be fighting for this little bone.

  • kimberworth

    Sick as a parrot i would think of this lot here.I have a feeling he knows there’s going to be a run on the banks,anyway good luck to him there’s only so much you can do here,just hope the troika throws out the insolvency laws,of course this will mean borrowing at higher interest rates to be paid back later if lucky.

  • Martijn Dekkers

    “Resigned for personal reasons” – I bet he was pushed for daring to make public statements that were not cleared with the politicians, and daring to stand up to them not so long ago. when I read about his initial statement, I though “he won’t have long left”

    • Pc

      Pushed by whom? BoC is run these days by strong pro-bailout forces that want change. I think it is more a matter that he got a better offer.

      • Martijn Dekkers

        Pushed by the political establishment. They can make life pretty difficult for him. also from the article: “In the email he criticised politicians for the “bemusing politicisation of the insolvency law”. Days later, a car owned by the bank and used by the Hourcan family, was destroyed by fire.”

  • Costas Apacket

    Well done John, it’s time for you to go since car bombs and arson will no doubt follow repossessions of the usual suspects assets and you don’t want to be around for that.

    Maybe publishing the list of MP’s NPL’s was the last straw?

    Chrystalla to the BoC? – You just never know?

    • All is good…

      If she is already (obviously) untouchable, why jeopardize it by moving to a position where you can be out-voted or sacked ?

      • Costas Apacket

        True.

    • Pc

      Costas, these are no longer the days where the government “suggests” bank CEOs. I think the next guy will be picked by Ackermann. My bet is German or British.

      • westspoon

        Lets hope so!

      • All is good…

        Wolfgang Schäuble gets my vote !

        • Costas Apacket

          I don’t think his car would last very long?

          • Ali Baba

            Nein Wolfgang will bringun ein Panzer

  • John Henry

    Good zoo keepers are hide to find and much harder to keep!

  • john john

    they took your money…it was not enough for them..now they want your homes! then they will take more money.This man knows whats going to happen and he is decent enough not to have anything to do with it!

    • GSP

      If they have not been paid for they are not YOUR homes.
      They belong to whomever has paid, and in most case that is the bank!

    • Costas Apacket

      I don’t think they really want your homes, they just want you to pay your loan instalments.

      Remember that little piece of paper you signed promising to do just that?

      Or doesn’t a loan agreement signed in banana land mean the same as it does in the rest of the EU?

  • Gandolph

    Good luck to the man; let’s hope he spills the beans on everything he knows and name names.

    • He wont, he’d never get another job! Saying that he might if he retires from BAnking and decides to write a book LOL!

  • Alex

    He improved the Bank but the turnaround has a way to go. We will need a turnaround executive who will support current customers gain new ones. Increased competition is also required, looks like a good gap in the market for some entrepreneur. The best way to effect the B of C turnaround is to increase competition.

    • All is good…

      Really ?

      • Alex

        Really.

    • thebluehornett

      No chance.

      • Alex

        good opportunity.

    • Argent

      Provided they can deal with the NPLs as other banks in other countries do.

      • Alex

        I would think a new bank would have open doors here.

        • Argent

          Not now, the politicians have shown their incompetence and contempt for Cyprus and the people that live here with regards many things, not just banking. Why should banks or any business come here. The banks aren’t even allowed to collect what is legally owed to them. Your politicians have made Cyprus not only a laughing stock but a place where you cant do business.

          • Alex

            I disagree, the new entry would have all of the opportunity and non of the baggage, imperfect as it is, the banking sector is in a better place than it was just two years ago.

          • Argent

            At the moment.

          • Alex

            That’s what opportunity is all about, timing.

          • Argent

            I wish I had your confidence Alex. I also hope that you are right and I am wrong.

          • Alex

            Watch this space…..:)

          • Argent

            OK, will do. Hows the dog by the way.

          • Alex

            woof woof

  • George Gee

    The fact that Ross/Ackerman arrived and invested because of him must be a kick in the balls for them. He has obviously found another job starting September.

  • thebluehornett

    He had no chance, the ‘old guard system’ won’t allow too much transparency.
    Could be a job for the ‘Family’ to invest in, not many others will.

  • Argent

    In other words, Cyprus and everything that goes with it, is not worth the effort. Cyprus as a nation is really progressing.

  • beasty

    probably got fed up with the idiots and corruption in this monkey pseudo-country

  • Brian Whiffen

    sorry to see him go, he has kept the politicians on line.

  • xenonx

    What happened, have all of the customers withdrawn their deposits now they are free to do so?

  • gj

    A bank with 60% NPLs? I don’t think there are any banks around that survived these kinds of numbers, so it’s good to do a strategic departure while he can claim a list of “achievements”. Plus, it’s true, he’s probably tired of all the bullshit too.

    • GSP

      More likely the latter.

  • costaskarseras

    We can only speculate but all indications point to the contrary of what the President and the Economic Minster say in their effort to talk up the economy. Things are going to get worse and nobody knows how people will react when their families are thrown out into the streets. I guess Mr Hourican read the future correctly and feared the oncoming storm and decided is it not worthwhile to stay on in his position.

    The resignation of Mr Hourican should act as a warning to the government and it should listen to the people’s concerns and not seek to satisfy the demands of TROIKA. The government should also stop flogging the publicly owned utilities which will lead Cyprus into deeper debt. Neoliberal policies don’t work for the people but for the 1%.

    • GSP

      Aw damn. I got to the last sentence before the ‘neoliberal’ crept into your comment. I thought that I might have to congratulate you again on a sensible remark.
      Alas your last paragraph is 180 degrees out of line. You wish to follow Greece down the toilet instead of following Ireland and Portugal back to the black.

    • All is good…

      I second GSP – almost noteworthy until the final sentence.

      If only the “publicly owned utilities” had received a good and proper flogging in the first place, they might have attained a modicum of efficiency and effectiveness.

      And subsequently, a level of self-sufficiency (ie. profit).

  • Victor Law

    Having given it a throw of the dice my fellow Irishman has decided not to throw good money after bad.
    His departure will be to the detriment of decent honest hard working Cypriots and conversely will bring a smirk to the faces of the elite fat cats who will be jostling and calling in all sorts of favours to ensure their own particular favourite gets the job. Hope none of them succeed and another foreigner has the balls to take them and the job on.

    • Argent

      I think his departure will have more adverse affects on Cyprus and its banking sector than what people realise. He was a decent knowledgeable and capable man.

      • All is good…

        Naysayer !..

        Obviously, the foreigner was a fool – didn’t know what he was talking about 😉

      • Victor Law

        Only to be expected Argent, considering he is a native of the land of scholars, potato bread and Guinness. I won’t mention their later Semtex related exports. 🙂

      • Costas Apacket

        Yes you can just imagine what will be said in future in EU financial circles about the amateur banana antics of the small narrow minded crew that exists in this septic isle.

        Great for future inward investment and credibility, not!

  • Slomi

    It is not good.

  • Ali Baba

    He’s had enough its pretty obvious really

  • Dm

    No famous sea captains in the hourican family