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Bank of Cyprus revises down sale of Ukraine arm

07 April, 2014

The Bank of Cyprus issued an announcement on Monday whereby the sale price for the Group’s Ukraine arm to the Russian Alfa Group has been revised down, but only "marginally", according to banking sources.
The bank said in its announcement that “a revised consideration has been offered by the Alfa Group that is viewed positively by the board of directors.”
It is believed that the downward revision is related to the crisis in Ukraine and the higher risk of Russian-owned businesses.
The Bank of Cyprus had announced on January 31 January that “as part of its deleveraging strategy, the bank has reached an agreement to sell its Ukrainian business to ABH Ukraine Limited, a member of the Alfa Group [of Russia]. The sale consideration is €225 mln and the proceeds will enhance the bank’s liquidity position. The accounting loss is approximately €126 mln and the impact on the Group’s capital is estimated at €49 mln or 0,2 percentage points negative on the Group’s capital ratios.”
The bank had explained at the time that the sale of the Ukrainian arm falls under the Group’s strategy of focusing on core businesses and markets and disposing operations that are considered as non-core. Already, some key properties in Cyprus have been put on the block with the prospect for a quick sale and recovery of capital investments.
Officials were in Russia last month to review the operations of the Uniastrum subsidiary, in which it controls a 80% stake, but management had said in earlier comments that it would consider keeping it, if the network started contributing to Group earnings once again.