NICOSIA, Oct 4 (Reuters) - Cypriot financial regulators have
fined Bank of Cyprus and six of its former executives
for failing to give shareholders information on the lender's
Greek government bond holdings, which almost bankrupted it.
Large depositors were forced to recapitalise the bank this
year after it reported massive losses on its Greek bonds. The
process, known as a "bail-in" was conditional to the east
Mediterranean island reaching agreement with international
lenders in March for 10 billion euros ($13.6 billion) in aid.
Cyprus's Securities and Exchange Commission (SEC) said Bank
of Cyprus's former management failed to provide shareholders
with timely information on their purchases of Greek government
bonds dating back to 2010.
Investors, the regulator said, were left with the impression
that the Cypriot bank had disposed of most of its Greek
government bond holdings after public comments to that effect by
its chief executive in Dec. 2009.
But in the months that followed, Bank of Cyprus accumulated
Greek bonds worth up to 2.4 billion euros, almost matching the
lender's equity capital of 2.5 billion euros, the SEC said.
The "least investors could have expected" was disclosure
from the bank about its holdings, taking into account they were
considered non-investment grade by ratings agency Standard and
Poor's, it said.
Bank of Cyprus lost 1.9 billion euros on its Greek bond
holdings, largely through an EU-approved restructuring of Greek
sovereign paper to make that country's debt burden more
Combined with losses of its then-peer Laiki Bank, exposure
to Greece was instrumental in triggering a financial crisis in
Cyprus and forcing the island to seek international aid from the
European Union and International Monetary Fund. Laiki was shut
down in the bailout.
The SEC said it had fined Bank of Cyprus 160,000 euros;
former CEO Andreas Eliades 140,000 euros; former deputy and
compliance officer Yiannis Kypri 120,000 euros; and four members
of its Asset Liability Committee 10,000 euros each.
($1 = 0.7340 euros)
(Reporting By Michele Kambas; Editing by Pravin Char)