Daily Press Review - 7/8/2019

Struggle over 13 seats

Politis reports that on 28 August, Hellenic Bank will announce two things. They will publish documents for the convention of an extraordinary general meeting, during which they will propose amendments to the bank’s statute as well as documents announcing the call of the 45^th Annual General Meeting. These events are preparing the composition of a new 18-member board at Hellenic Bank, which will reflect the new shareholding structure of the bank. The bank yesterday announced 18 nominees, while there may potentially be more in the coming days. According to Phileleftheros’ sources, the intention is that the new Board has representation by all five basic shareholders i.e. Demetra Investment, Wargaming, Pimco, Third Point and ETYK. To a large extend, it seems that the shareholders are on the same page. The article goes on to list all the names of the candidates.



The 18 candidates for the Board

As above, InBusinessNews reports on the candidates for the new Board of Hellenic Bank. It reports that the election of 11 current members and 7 new candidates will be tabled at the 45^th Annual General Meeting of Hellenic Bank that will be held on Wednesday 28 August. The article goes on to provide the profile of all 11 current Board Members, including Wargaming’s Chief of Staff Marianna Pantelidou Neophytou who has been proposed as a non-executive director.



Two-horse race at Hellenic in view of AGM

Stockwatch reports that the two biggest shareholders of Hellenic Bank (Wargaming and Demetra Investment) are expected to fight an electoral battle at the AGM of the bank’s shareholders on 28 August, when the new members of the group’s board will be elected. The two big shareholders will go to the upcoming AGM with their own informal combinations, with Wargaming having the lion’s share as it comes to the candidates that are proposed for re-election. Out of the 18 people that have been proposed – and whose names have been sent to the Central Bank for approval – 5 were nominated by Wargaming. These are Marianna Pantelidou, Stephen John Albutt, Evripides Polykarpou, Ioannis Georgoula and Irena Georgiadou.



Hellenic Bank: 18 candidates for 13 seats

Phileleftheros reports that 18 candidates are claiming a seat in Hellenic Bank’s BoD, which only has 13 positions. Of those 18 candidates, 11 are current Board Members, that will be nominated for re-election, while the remaining 7 candidates are new. The main difference in the current members, is that many of them have stopped being considered as independent, after the Bank adopted stricter regulations for their definition. The CEO and the CFO will also participate in the Board, as executive directors. At the AGM, the following Board Members will be up for re-election in a separate vote, according to the Regulations 108-114 of the Bank’s statute. Stephen John Albutt, is proposed as an independent non-executive Member, David Whalen Bonanno is nominated as a non-executive director, Demetris Efstathiou is nominated as an independent non-executive director, Ioannis Matsis is proposed as an executive director, Youssef Α Nasr is proposed as an independent non-executive director, Marianna Pantelidou Neophytou is proposed as a non-executive director, Evripides Polykarpou is proposed as an independent non-executive director, Andrew Charles Wynn is proposed as an independent non-execuitve director. The following individuals will be up for election as Members of the Board, in a separate vote, according to the provisions of Regulations 109-114 of the Bank’s statute. Zion Bahloul is nominated as an independent non-executive director, Marios Maratheftis is proposed as a non-executive director, Kyriaki Pilia is proposed as an independent non-executive director and Michalis Spanos is proposed as an independent non-executive director. At the AGM, they will vote on the establishment of an Employee Incentive Plan. Specifically, they will suggest making available 20.6 million regular shares (nominal value: €0.50). It is a performance-based cash and share plan that will be launched from the Financial Years 2020-2024 (both inclusive).



Hellenic Bank: Employee Incentive Plan

Haravgi reports that Hellenic Bank announced an Employee Incentive Plan that will be tabled for approval by the Bank’s shareholders at the Annual General Meeting on 28 August. It includes the concession 20.640.250 ordinary shares of a nominal value of €0,50 each. It is also reported that the employee incentive plans will be performance-based cash and/or share plans, during the financial years 2020 to 2024. The article also reports that during the AGM, the re-election of the bank’s current directors will be proposed in a separate vote. It goes on to list the names of these directors.



Employee Incentive Plan

Same as above, with Politis reporting that the Plans will be performance-based cash and/or share plans and will form part of the employees’ variable remuneration. Each performance-based share award entitles the employee to one ordinary share of the Bank on vesting, at no cost to the employee. A maximum of 20.640.250 ordinary shares in the Bank of a nominal value of €0,50 each (the “New Shares”) may be issued during the following five financial years period (2020 to 2024, both inclusive). The objective of the Plans will be to contribute towards the creation of a culture of aligning the interests of the Bank’s employees with those of the shareholders of the Bank through the linking of awards to employees with the performance of the Bank. The Plans, including the award and vesting of such performance-based shares will be subject to the discretion of the Board’s Remuneration Committee, which consists of Non-Executive Directors. The Remuneration Committee will be responsible for the implementation of the Plans.



Deposits: Here come the negative interest rates

Cyprus has started implementing negative interest rates as well, launching a trend, which has already been established abroad. Essentially, the client will be paying to keep their deposits in the bank. As it is well-known the interest rates of the banks have already reached 0%, but very soon negative interest rates will be implemented. Initially, this seems to only concern big depositors, but it is not ruled out that in the future, all deposits will have negative interest rates. The article reports that the first bank in Cyprus to start imposing negative interest rates, is Hellenic Bank. They have already notified their big clients, that they will impose a negative interest rate. Potentially, in the immediate future more banks will follow. However, at the present stage there has been no such decision. A representative of Bank of Cyprus said that they are not thinking to put such a policy at this stage. As it comes to Hellenic Bank, they seem to have adopted this policy due to the bank’s excessive liquidity, which partially resulted from the absorption of the Co-op. Specifically, a representative of the bank with whom Alithia had communicated, reported that the specific decision that will be implemented after the summer essentially concerns 5-10 big depositors and specifically Provident and Retirement Funds owned by semi-governmental organisations. The decision will not be implemented for private big clients. As the Bank’s representative said, Hellenic Bank was led to this decision because of the excessive liquidity it has. He reported that Hellenic has to pay interest– even if its low – to the depositor, while it also has to pay a second interest (-0.4%) to the European Central Bank. However, he noted, this shows that it is a healthy bank, which has much more liquidity than it needs. Asked if they are worried that the bank will lose some of its clients after imposing the negative interest rate, the Bank’s representatives said that they will not. He argued that if another bank accepts these deposits, it means that it needs liquidity and that something is wrong with it. In the meantime, the paper also talked with the EAC’s spokesperson, Christina Papadopoulou who confirmed that Hellenic Bank contacted the Organisation, informing them that they will impose a negative interest rates on a deposit which concerns the Retirement Fund of the organisation’s employees. It is deposit amounting to €400m.



ECB calls affected parties to make preparations for interest rates

The European Central Bank published an information video yesterday which had to do with benchmark rates of the Euro area from October onwards. Cornelia Holthausen who is in charge of benchmark rates at the ECB argued that the affected parties must prepare in an appropriate and timely manner. The euro short-term rate (€STR) will reflect the wholesale euro unsecured overnight borrowing costs of euro area banks. As it comes to the interest rate environment in Cyprus, Hellenic Bank will start charging a negative interest rate for big deposits, in an effort to manage the excessive liquidity of the system and its funds.



507 days for a building permit

Even though tourism is considered the backbone of the Cyprus economy, contributing over 13% to the GDP, it is still showing some serious weaknesses when it comes to its competitiveness. The most well-known weakness is the price of its tourism packages compared with neighbouring countries, but this is not the only problem according to KPMG’s Cyprus Hospitality Report. The report invokes the tourism competitiveness index of the World Economic Forum 2018, which showed that the main weaknesses were the lack of cultural sources and professional trips, natural resources and the lack of infrastructure at the ports and airports. But as for the island’s competitiveness, the report found another serious weakness, which is how long it takes to gain a building permit to invest in the sector. It found that Cyprus is among the last countries internationally in terms of how long it takes to issue a permit, with an average of 507 days, when Turkey just takes 103 days.



Revenue of €72m from Airbnb rentals  

The concerns that have been expressed by hoteliers and hotel manages about how damaging the operation of Airbnb is to the industry appear to have been calmed for now, as the KPMG report on tourism has shown that just 1.3% of total reservations in Cyprus in 2018 were made through such platforms. However, the fact that reservations through the platform increased 19% compared with 2017 has shown that it is a force to be reckoned with. It is estimated that 41,509 reservations were made through Airbnb in 2018, for 5,289 properties. It is also worth noting that revenue from these rentals reached €72m.



€138 to stay Cyprus, €77 in Istanbul

Phileleftheros also reports on the KPMG report, focusing on how expensive Cyprus is for an overnight stay. It costs on average €138 to stay in Cyprus, when it costs just €77 to stay in competitor Istanbul, €114 to stay in Lisbon and €120 in Athens. It costs one euro more to stay in Madrid at €139, while Rome is the most expensive with €147.



Parliament must intervene over the casinos

SAKOP, the Association Confronting Social Problems, has expressed its disappointment over the way the casinos are operating in Cyprus. It said it has unfortunately read in the local press that permission will be given for casinos to be advertised, which is added to the other catastrophic privileges the Commerce Minister has granted, along with allowing minors to enter the casino and not banning smoking. Or providing licenses for casinos in all the towns, which hasn’t happened anywhere else. It says the minister lied as he said it would increase tourism to the island, first saying tourists would increase by 3 million and then backtracking and saying 300,000. A study has shown that 80% of punters are Cypriots, a few Greeks and other foreigners living in Cyprus, but zero tourism. And now they will be allowed to advertise on the television and social media. The association calls on MPs, the government and President to intervene.



Trying to ease the transition for cancer patients

The Federation of Cyprus Patients has been in continuous contact with the HIO and the BoC Oncology centre over these past few days, so as to determine ways to ease the transition of cancer patients in September. Marios Kouloumas, the president of the Federation said that because doctors have long waiting lists, and patients will experience delayed visitation over the first few weeks, they believe that some facilities should be given in terms of referrals. He explained that for the patients who, within a specific timeframe, have not managed to get a referral from their GP, visiting their specialized doctor would only cost €6 instead of the predetermined €25 for direct visitation. He added that cancer patients must be adequately educated about GHS procedures prior to the centre’s integration into the system, but he reassured that patients, who are being treated currently, will not be impacted in any way.



State pharmacies are closing down

Phileleftheros reports that in less than a month, 28 out of 43 state pharmacies will permanently close down, and that the relevant procedures are already in motion. Meanwhile, the remaining 15 pharmacies will continue to serve patients after 1 September, are beginning preparations for a smooth transition into the new system without problems. The changes to the pharmaceutical sector were planned and presented by the HIO to the Health Minister and OKYPY. The plans include detailed actions for the following couple of weeks, with each having a strict, specific timeline.