Tags: wilbur ross | bank of cyprus | lse | listing

Wilbur Ross: LSE Listing Will Lift Bank of Cyprus Profile

Image: Wilbur Ross: LSE Listing Will Lift Bank of Cyprus Profile
Wilbur Ross (Getty Images)

Thursday, 28 Apr 2016 09:24 AM

Bank of Cyprus’s plan to list shares on the London Stock Exchange and exit the Athens bourse will raise the profile of the eastern Mediterranean island’s largest lender and help lift its market value, U.S. billionaire investor Wilbur Ross said.

“A listing in Athens leads investors to conclude that Cyprus is very related to Greece, which is incorrect,” Ross said in a telephone interview. “The fact that Greek banks all trade at even bigger discounts to book value than Bank of Cyprus only adds to the problem.”

Ross, who serves as vice chairman at Bank of Cyprus, sees the new listing as a step in the right direction for the lender, as getting the bank out from under “that invidious comparison is a useful thing.”

The London listing is planned for the second half of 2016. Subject to eligibility criteria, the Cypriot lender’s shares may be included in the FTSE UK Index series, the Nicosia-based lender said March 31.

Financial stocks often trade at better multiples if they’re listed in London, Ross said, while being included in the FTSE index would bring “buying power,” as an increasing number of investors are “indexing a portion of their portfolio and billions of dollars are tied up in FTSE indexing.”

While a decision to leave the European Union could represent a risk for the U.K. economy, London is still the best choice for the bank’s primary listing, Ross said.

Bond Market

Cyprus will continue to have access to the bond market following its March 7 exit from a three year-old aid program with euro-area partners and the International Monetary Fund even though it didn’t request a precautionary post-program credit line, Ross said. “While it was a perhaps a little riskier way to do it than I would have liked, the economy is turning around,” he said.

“All the signs for the Cypriot economy are pretty encouraging so the frame of reference in which Bank of Cyprus is operating is also getting better, ” Ross said, pointing to rising tourism, strong new company incorporation numbers and increasing bank deposits.

Argentina’s $16.5 billion new-debt issue suggests that Cyprus will have continued access to the bond market, Ross said. “I’d sooner buy Cypriot sovereign debt than Argentina’s,” he said. Cyprus mostly needs bond-market access to roll over maturing debt, “and I feel quite comfortable they’ll be able to do that,” Ross said.

QE Program

Countries like Cyprus that complete support programs should have access to the European Central Bank’s quantitative easing program, Ross said. Because the country’s sovereign bonds aren’t rated investment grade, they don’t currently qualify for the 1.1 trillion-euro ($1.3 trillion) program aimed at reviving inflation.

“Cyprus and Ireland are two poster boys for reconstruction and renovation of their economies so I don’t follow the logic of discriminating against them,” Ross said. “It would be much more sensible, and not any more risky, for the ECB to include Cyprus.”

Joint Bonds

Ross called a proposed common euro-area bonds “sensible” as part of a move toward financial consolidation in the single-currency area.

“If the euro zone is going to function long term, you have to move toward the centralization of fiscal policy as well,” he said. “A euro area-wide bond, or a bond that was somehow a shared credit, is a good idea, and it would be especially appropriate to help fund Cyprus reunification.”

Cyprus has been divided into the internationally recognized Republic of Cyprus in the south and the Turkish Republic of Northern Cyprus since 1974.


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Bank of Cyprus's plan to list shares on the London Stock Exchange and exit the Athens bourse will raise the profile of the eastern Mediterranean island's largest lender and help lift its market value, U.S. billionaire investor Wilbur Ross said."A listing in Athens leads...
wilbur ross, bank of cyprus, lse, listing
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2016-24-28
Thursday, 28 Apr 2016 09:24 AM
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