At its extraordinary meeting held today, the Board of Directors of Bank of Cyprus has examined the letter it received this morning from Marfin Popular Bank regarding the latter''s declared intention to submit a public tender offer to the shareholders of Bank of Cyprus.
Despite the fact that there are questions regarding the legality and validity of the proposed offer by Marfin Popular Bank to the shareholders of Bank of Cyprus, the Board of Directors considers it appropriate to inform its shareholders, staff and the investing public in general about the essence of these developments.
The Board of Directors of Bank of Cyprus considers that the declared intention of Marfin Popular Bank:
* Cannot be taken seriously as it comes from an organisation which has only recently been created through the combination of three financial institutions, whose operations have not as yet been merged. International practice indicates that mergers require time and close co-operation by all parties involved. Consequently, the intended hostile acquisition of another two larger banking organisations by Marfin Popular Bank entails high risks for the shareholders and staff of all involved.
* Offers a proposed consideration which comprises solely of Marfin Popular Bank shares. To date, Marfin Popular Bank has not published its audited consolidated financial statements of the recently merged entity, which are fundamental for the correct assessment of the proposed consideration, thus entailing significant risks for the shareholders of Bank of Cyprus. Besides, the public tender offer announced by Bank of Piraeus yesterday (11 January 2007) values Marfin Popular Bank at approximately half its current market value.
* Does not reflect the history, size, credibility and excellent prospects of the largest Bank in Cyprus.
The Board of Directors also believes that any potential combination of Marfin Popular Bank with Bank of Cyprus will create a significant concentration of the Cypriot banking sector in one organisation, with clear adverse implications on the level of competition in the market and on the wider economy of Cyprus.
The autonomous expansion of the activities of Bank of Cyprus in Cyprus, Greece and the promising markets of Russia and Romania will generate significant value to shareholders. Consequently, contrary to Marfin Popular Bank, the future profitability of Bank of Cyprus will continue to be based on recurring and steadily increasing profits derived primarily from banking activities.
The Board of Directors has unanimously reached the conclusion that the declared intention of Marfin Popular Bank is not in the best interest of the shareholders, staff and customers of Bank of Cyprus or the wider economy.