Lombard Bank has no exposures to Cypriot banks even though its largest shareholder is the ill-fated Popular Bank of Cyprus, according to CEO Joseph Said.
Speaking to timesofmalta.com this morning, Mr Said insisted the Cypriot banking crisis had “absolutely no affect” on Lombard Bank’s operations.
“Lombard has no exposure at all to Cypriot banks and Laiki (Popular Bank of Cyprus) is a shareholder like any other shareholder,” he said.
Laiki has a 49 per cent stake in Lombard, making it the single largest shareholder. The majority of shares are held by Maltese investors.
Under the terms of a bailout deal agreed by EU finance ministers and the International Monetary Fund early this morning, the Cypriot government will have to wind down Laiki, the second-largest bank, with depositors holding more than €100,000 likely to face big losses. Deposits of lower amounts will be transferred to other banks.
Mr Said explained that even if Laiki’s shares had to be sold, it will have to seek prior approval from the regulator. “The law states that anybody who owns more than five per cent shareholding has to seek approval from the Malta Financial Services Authority before selling or reducing his shareholding.”
Cyprus’s two largest banks were badly bitten by the Greek financial meltdown after they were forced to take a cut on investments there when Greece was bailed out.
The Cypriot government had to bailout the banks and in turn asked for a bailout from the EU. The €10 billion Cyprus bailout was approved on condition that the government raised some €7 billion.
An initial levy on bank deposits across the board that had to rake in €5.8 billion was scrapped by Cypriot lawmakers and this was replaced by the latest package that will see the Popular Bank of Cyprus close down. The details of how this will be implemented are still very sketchy.
Lombard Bank is listed on the Malta Stock Exchange and two weeks ago, when presenting the financial results, directors recommended shareholders approve a 4.3 per cent increase in dividends to €0.12 gross per share when the annual general meeting convenes next month.