Former CEO of Bank of Cyprus jailed for misleading shareholders

Former CEO of Bank of Cyprus jailed for misleading shareholders

A court in Cyprus sentenced the former chief executive of Bank of Cyprus to two-and-a-half years in prison on Friday for misleading shareholders on its capital needs immediately prior to the country’s financial meltdown in 2013.

Andreas Eliades, who resigned from the bank in 2012, had been found guilty by the island’s criminal court of issuing misleading statements about the lender which was hit heavily by its exposure to debt-laden Greece.

The court also fined Bank of Cyprus 120,000 euros. Four other executives at the bank were found not guilty, the semi-official Cyprus News Agency said.

Eliades, at the helm of the bank for about eight years, was accused of understating a capital shortfall at the bank. At an annual shareholder meeting in June 2012, Eliades said the bank had a 200 million-euro shortfall. This was revised considerably higher in a letter he penned to the governor of Cyprus’s central bank the following day, the court said.

The value of Greek government bonds were written down in early 2012 in an EU-sanctioned move to make that country’s debt mountain more manageable. It dealt a heavy blow to Cypriot banks, and snowballed into a fiscal crisis.

Bank of Cyprus recapitalized by converting a percentage of uninsured deposits above 100,000 euros into equity in 2013. It was a condition of a 10 billion-euro international bailout extended to the Mediterranean island by the European Union and the International Monetary Fund.

The bank’s senior management has been completely overhauled since then, and its shareholder structure altered.