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Bank of Cyprus sells Ukraine ops to Alfa; Uniastrum stays

31 January, 2014

Bank of Cyprus announced it is selling its loss-making Ukrainian business to a subsidiary of the Russian giant Alfa-Bank Group, in a deal worth €225 mln.


According to the Cypriot bank that is disposing of its non-core assets and trying to recover non performing loans in order to prop up its cash base, it is selling its 99.77% stake in PJSC Bank of Cyprus to ABH Ukraine Limited, a member of the Alfa Group.
The sale consideration is €225 mln, subject to adjustments to be concluded by the end of the first quarter.
“The proceeds of the sale will enhance the bank’s liquidity position,” BOCY said in the announcement.
It added that “the impact on the Group’s capital is estimated to be €77 mln or 0,3 percentage points negative on the capital ratios. The accounting loss from the sale is €158 mln and represents the difference of the consideration received and the net book value of the business, as well as the unwinding of the related foreign currency reserves of €44 mln.
The bank said that it “proceeded with what it considers to be a good transaction in order to deleverage and de-risk its balance sheet and to eliminate future potential risks relating to its Ukrainian investment, particularly given the political and economic environment prevailing currently in Ukraine.”
Evidently pleased with the deal, BOCY chairman Christis Hasapis said “this disposal is being conducted faster than was expected according to our Restructuring Plan and significantly improves our position as it reduces possible future risks related to our investment in Ukraine.”
“This development, as well as other that are in the pipeline, will allow the bank to resume full operations with a positive impact on the Cyprus economy and society, in general.”
PSJC Bank of Cyprus was acquired in 2008 and currently operates a network of 42 branches with total assets of €245 mln and equity of €70 mln.
According to National Bank of Ukraine statistics, Alfa-Bank Ukraine was the tenth largest in the country in terms of assets, the eighth largest in terms of loans to individuals, the ninth largest in terms of loans to legal entities, and the eighth largest in terms of customer accounts of legal entities. The bank’s immediate parent is ABH Ukraine Limited with Alfa-Bank Russia as its second-largest shareholder. The bank is a part of the Alfa Group Consortium, which is one of Russia’s largest privately owned financial-industrial conglomerates.
Meanwhile, the bigger Uniastrum network in which Bank of Cyprus controls a 80% stake, will remain with the Group, for the time being, especially after the Russian’s bank’s founder and minority owner George Pyskov met with CEO John Hourican and BOCY chairman Christis Hasapis recently to work out their differences.
The bank has already announced that General Insurance of Cyprus, the wholly-owned insurance subsidiary, is to transfer the entirety of its client portfolio in Greece to ERGO General Insurance Company S.A. with which it already cooperates in Greece.
In an announcement, the company said that “the agreement provides for the gradual transfer to ERGO of existing insurance policies which were issued by Kyprou Asfalistiki in Greece. At the same time, the agreement also encompasses broader cooperation in the non-life insurance sector in Greece.”
ERGO is part of the Munich Re Group with which General Insurance also collaborates in Cyprus.
The company added that “the agreement does not affect the rights of customers who have insurance policies with Kyprou Asfalistiki, which will remain in force until their expiry. Additionally, it offers the best prospects since ERGO, a leading provider of insurance services in Greece, is the most dependable choice to meet the future insurance needs of Bank of Cyprus customers.”
Next under the hammer will probably be the CNP general and life insurance businesses inherited from the dissolved Laiki Popular bank, in which Bank of Cyprus now controls 49.8% with the balance, as well as management, in the hands of the French insurance giant.