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Loans of one billion euros to bank board members

Confidential data from the Central Bank reveals that the Bank of Cyprus and the Cyprus Popular advanced credit facilities of more than one billion euros to their board members in 2011.

central bank of cyprus

CREDIT facilities of more than €1 billion were granted in 2011 by the two large banks to members of their Boards, which were subsequently proved that they exceeded the limits set by the law.

Confidential data from the Central Bank register in detail the credit facilities granted by the two banks to directors and related parties.

The law prohibits banks to lend more than 20% of their funds to their directors.

Based on the data, the two banks exceeded this threshold in 2011, possibly due to capital losses after the haircut on Greek bonds.

Following the resignations of directors in 2011 and 2012, total loans declined significantly.

Among the credit facilities granted by Bank of Cyprus is that of former Chairman, Theodoros Aristodimou. In 2008 total facilities amounted to €182 million and by 2011 they reached €317 million. The CB data indicate that of the €317 million, there was no collateral for €25 million.

In the case of Cyprus Popular Bank, they are the credit facilities associated with former board member Platon Lanitis. Mr Lanitis had facilities of €300 million in 2008, which rose to €347 million by the end of 2012. The data indicate that for €16.5 million from the amount of €347 million there was no collateral.

Former CEO of Bank of Cyprus, Andreas Eliades had facilities of €4.4 million in 2011 million of which €1.1 million was not secured (non-secured).

Former CEO of Cyprus Popular Bank, Efthimios Bouloutas, had facilities of €2,2 million in 2010, which was almost all secured and former non-executive chairman Andreas Vgenopoulos had facilities of €1.6 million, of which €0.3 million was non-secured.

The facilities provided by Bank of Cyprus include €64 million, given to two former owners of Uniastrum, almost fully secured.

The figures of Cyprus Popular for 2011 include an amount of €105 million of Vassilios Theocharakis, of which €75 million are presented as non-secured.

Former head of the risk management of the Bank, Demetris Spanodimos had in 2011 facilities of €14 million, of which €11 million was non-secured.

The Central Bank data do not indicate in what form is the collateral that banks had for the facilities granted.

Unlike Bank of Cyprus, Cyprus Popular in 2011 exceeded the limit of loans that may be granted to related parties without collateral. The threshold is 2% of the equity of the Bank and they had reached 8.66%.

The data also include the balances of many other executives of banks and their related companies.

Loans of one billion euros to bank board members

Readers' comments

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  • Spirit of Odd Job Bob says:

    On April 22, 2013 at 2:02 pm, in answer to a serious question on this very forum: (“Why they do these things, do they not realise etc etc…?”), one particularly prescient ghost wrote:

    “…the original theory (i.e. the top chaps in Cypriot society saw the entry into the Eurozone as an opportunity to borrow huge sums from Eurozone banks at really low interest rates, say it was for property construction without ever really intending to build much of sufficient quality to live in, if build at all, then disappear with the money from loans and sales, enriching themselves and their “tribe” significantly, with the vague idea that the country would be alright, even though it didn’t really matter….)”

    SoOJB went on to add: “…there IS no advantage for the State and the Banks running a property system like this, but for the individuals, the “tribal chiefs” who inhabit the higher echelons of state and of the banks, there is plenty.”

    The thing that stands out with these bankers behaviour was, at a certain point, they didn’t even bother with the pretence and hassle of building property!

    However, and MOST importantly though, (we know now that prices of property were artificially inflated, as well as unilateral definitions of Non Performing Loans introduced, secured against the inflated prices, so as to hide, well, the fact that these loan were non-performing!) what were these loans secured against?

    Answer (you’ll like this!): property in the name of the borrower, EVEN IF THAT PROPERTY WERE ALREADY SOLD!

    Retaining ultimate ownership of property that has not been transferred to the rightful owner as the deeds were not available not only greatly facilitates these loans, but without the Title Deeds Scam, THIS LOAN FRAUD WOULD NOT HAVE BEEN POSSIBLE (as the collateral in the name of the borrower would be significantly smaller.) There are unfortunate side-effects, like IPT being now due (as hardly any properties would be over the 1980 threshold of the plots were subdivided), but this can be overcome by introducing lots of convoluted ways to ensure that the victims of the fraud pay the IPT anyway…

    This whole shooting match is thus nothing but a loan fraud, a big, fat, extremely effective asset grab. The property element of it is secondary.

    It was all foretold in the Book of Alashiya anyway, the final fragments of which are currently being translated….

  • Gavin Jones says:

    In short, these bank ‘executives’ are total shysters.

  • @Denton Mackrell – I have been advised (but cannot confirm) that banking executives were charged 2% on their loans, which they put on deposit at 6%.

    That scenario, if accurate, would earn an income of €40,000/annum on a €1,000,000 loan.

    I wonder if the banks have any executive vacancies?

  • Denton Mackrell says:

    Well gosh! I am truly shocked! Never did I imagine that these board members would be so brazen!

    Sarcasm apart, like so many directors of large organizations they appear to have been unable to grasp the fact that corporate funds are not there as a pot of money for their uncontrolled, unauthorized private use/abuse. What were the Board Audit Committees and Board Risk Committees of these banks doing? Looking the other way?

    One of the perpetrators was even the head of the Cyprus Popular bank’s risk management dept. Clearly, these boards did not have a clue about corporate governance and risk management. Moreover, there appears to be no mechanism let alone appetite for such individuals to be made accountable. Sic transit gloria iustitiae in Kypros.

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