Only three years ago, Bank of Cyprus was on the critical list. It had been forced – under the terms of a €10bn bailout of the country – to seize cash from its savers and was being kept afloat by billions of euros pumped in from the central bank.
But, in a story of revival that mirrors the recovery in the Cypriot economy, the bank is now eyeing a listing in London and outlining plans to expand in the UK.
Chief executive John Hourican – who got the top job after leaving Royal Bank of Scotland amid the controversy of its Libor fine in 2013 – was in the City last week explaining how he intends to make the bank attractive to investors.
The details are still sketchy. An initial listing is targeted for early next year but the main plan is to get into good enough shape to gain a place in the coveted FTSE indices that will help lure in big-money investors.
Nonetheless, it is a sign of the impressive ambition Hourican has for a bank that, as he has admitted, is still “in repair”: some 58% of its loans are still non-performing (in default or close to it).
But there are positive signs. Just €800m of emergency funding from the central bank still needs to be repaid, a small sum compared with the €11.4bn – equivalent to 70% of the country’s GDP – that was required to keep it afloat in 2013. Also, customers are once again putting their money on deposit at the bank, which was the first to force its savers to contribute to the rescue of the ailing financial system.
In the depths of the eurozone crisis, anyone with more than €100,000 in savings lost money and the island’s second-largest bank, Laiki, was shut down almost overnight under the terms Nicosia agreed to in 2013. Bank of Cyprus took on the smaller depositors at Laiki and Hourican was recruited to turn around an institution that had, as he has put it, embarked on “managerial tourism”. Businesses in Russia were sold off and other international operations scaled down.
Hourican, who was accustomed to controversy after being part of the team attempting to turn around RBS, did not escape it in Cyprus. He once found his car burnt out, which he told one interviewer was a sign of the anger local people felt living under the bailout.
Announced in the early hours of 25 March 2013, the bailout terms Nicosia accepted from the EU, IMF and European Central Bank were harsh. Yet the country finished its rescue programme in March: a result seen by many as little short of miraculous.