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Risk presentation 2013


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How things happened then and still apply today.

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Risk presentation 2013

  1. 1. When Risks materialize ! The following announcement is taken from Laiki Bank website on 16.4.2013 Do not invest in leveraged products or derivatives with money you cannot afford to lose. 16.4.2013 All rights reserved 1
  2. 2. When Risks materialize ... Growth since initiation 1901 “People’s Savings Bank of Limassol” 1967 “Cyprus Popular Bank Ltd” 1970 21,16% participation by HongKong Bank acquisition of Grindleys Bank in Cyprus 1991 Greece Athens branch 2001 Australia 2005 Channel Islands Guernsey 2006 19,9% participation by Marfin Financial Group Merged with Marfin & Egnatia Expansion to Russia, Ukrain, Malta, Estonia Laiki CypriaLife & Laiki Insurance in partnership with CNP 2010 Marfin investment group involved in Olympic Air, Vivardia 2011 New representative office in Beijing China 16.4.2013 All rights reserved 2
  3. 3. Risks...Expansion, operational, equity, market, currency, political • Last few years vast expansion • Complex new group structure • 2011 desperate capital increase of Eur 488,2 millions • Goodwill losses from Romanian market Eur 22,7 millions only for nine months ended 30.9.2012 • Provision for impairment of advances in 2012 • Losses around Eur2,5 billion [Greek Gov. Bonds] • Large Loans transferred through Greek branches • Finance support on MIG’s wider activities • Corporate governance revealed to be biased • Inappropriate supervision from supervisory authorities 16.4.2013 All rights reserved 3 When Risks materialize ... Tournament hazard signals
  4. 4. When Risks materialize ... If Signals were taken seriously • Expansion should had been consistent to available funds, market potentials, macroeconomic situation • Complex group structure and related parties transactions transparency was possibly not in place • Investment portfolio should had been better monitored and supervised • Financial institutions should had been properly supervised on their activities, corporate management both internally and by the responsible authorities 16.4.2013 All rights reserved 4
  5. 5. When Risks materialize ... Outcome ... • Governmental support through direct capital participation in 2012 [84%] • Short term hopeless planning • Bankruptcy was one way ticket • EU forces strict agreement one of kind, innovative in nature worldwide: bank clients to suffer loss of their personal bank deposits The bank is split in two parts: – Retail: individuals <Eur 100.000 and specified part of SME’s – Defaulted part: Individuals > Eur 100.000 and rest of SME’s 16.4.2013 All rights reserved 5
  6. 6. When Risks materialize ... Food for thought ... Even Risk Warnings from Laiki Bank recommend: Do not invest in leveraged products or derivatives with money you cannot afford to lose. 16.4.2013 All rights reserved 6 Sources: MPB Pillar III Disclosures for Year 2010(March 2012), Condensed Interim Consolidated Financial Statements 30.9.2012, Financial Mirror, Reuters, MPB website, Moody’s Synergatis PLC