Lombard Bank intends to bid for the 49.01 per cent of its shares held by Cyprus Popular Bank.

The Investment Bank of Greece is seeking legal advice on Lombard Bank’s intention to bid for the 49.01 per cent of its shares held by Cyprus Popular Bank before deciding how to vote during Thursday’s annual general meeting.

IBG is handling the sale of CPB’s overseas investments following the national bailout of the Cypriot bank.

“CPB could vote for or against, or it could abstain,” the spokesman said.

“But until we have received legal advice, there is nothing we can add.”

A spokesman for IBG said that the sale of CPB’s shares was being closely monitored by the Cyprus Resolution Authority, responsible for recouping the money given during the bailout, and other entities to ensure that the sale was “transparent and competitive” and in the best interest of Cypriot taxpayers.

Sources expressed concern over the announcement by Lombard Bank that it would seek approval from its 1,300 shareholders – some of whom hold a chunk of shares – to buy the shares itself, although it gave little information on how it would do so.

While sources originally assumed the purchase could be financed through the bank’s own retained shares, others delved into the wording of the company announcement and believe the management intends to use the 36 million non-issued shares – waiving the pre-emption rights and having a rights issue to bring the capital back up to regulatory levels, which could impact the share price and dilute the shareholding.

IBG has not revealed any information about the number of bidders interested in the bank

The bank is asking shareholders to authorise it to pay a minimum of €1.54 and a maximum of €3.09 per ordinary share, with the share price currently at €2.411.

In the midst of considerable speculation about the implications should CPB vote in favour of Lombard bidding itself, sources said the mandate was to get as much money from the sale as possible in the interests of Cypriot taxpayers – which may not be case if Lombard proceeds.

They said this could deter other bidders, who might assume that CPB’s approval was a tacit nod for Lombard’s bid.

IBG has not revealed any information about the number of bidders interested in the bank, but the spokesman confirmed that the Malta Financial Services Authority was aware of both the number of bids and details of the bidders.