By George Georgiopoulos
ATHENS (Reuters) - The Bank of Cyprus (CY:BOC) expects modest profitability in the coming quarters and will not pay a dividend this year, its chief executive said on Thursday, speaking as its shares were listed on the London Stock Exchange.
Cyprus's biggest commercial lender, pushed to the brink at the peak of the euro zone debt crisis three years ago, is continuing its recovery after a "bail-in" of unsecured deposits and a recapitalisation.
One of the investors in the recapitalisation was billionaire Wilbur Ross, U.S. President-elect Donald Trump's pick for Secretary of Commerce.
Funds managed by WL Ross & Co. said on Thursday his confirmation would not impact his funds' shareholdings in the bank.
Run by high-profile veterans of the European banking crisis, with former Royal Bank of Scotland (L:RBS) executive John Hourican its CEO and ex-Deutsche Bank (DE:DBKGn) CEO Josef Ackermann as chairman, the bank has delisted from the Athens bourse and joined the London market.
The listing in London was a vote of confidence in the City despite the looming exit of Britain from the European Union, CEO Hourican said.
"Our board's view is that the City of London remains the right place for us to put our bank's stock, a de facto vote of confidence. The City will prevail," he said.
It will remain listed on the local Cyprus Stock Exchange but hopes the London exposure will help to attract more long-term investors.
RECOVERY
Bank of Cyprus was forced to convert a portion of unsecured deposits into equity to recapitalise at the peak of an economic crisis which shook Cyprus in early 2013.
The east Mediterranean island, one of the euro zone's smallest, emerged from a bailout programme in early 2016.
"It is another step in the normalisation of what has been a pretty amazing story of a country and a bank that ended up on the bad side of worse and I am very pleased with the progress we're making," said Irishman Hourican, appointed in late 2013 when the impact of the bail-in was still raw.
Hourican told Reuters in a telephone interview the 123-branch bank, with a small presence in Britain, would continue to try to clean up its balance sheet.
"There will be modest results in the context of continuing to direct pre-provision operating profit towards balance sheet quality and repair," he said. "At the end of the day a safe bank is a valuable bank."
He said that despite the profitability outlook there will be no dividend payment this year as there was still "a lot of work to do to get the balance sheet repair job completed."
"Until balance sheet repair is behind us, this conversation is premature. For most banks that have been in repair it takes some years to restore the ability for a normalised dividend," he said.
Hourican expects the bank will continue to further reduce its bad debt load. Non-performing exposures stood at 58 percent of gross loans at the end of the third quarter but have been coming down in the last six quarters.
"I have a positive outlook on our ability to deliver against that, it is the single final piece than needs to be put in place," he said.