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CYPRUS: BOC Holdings gets green light from Ireland for EUR 220 mln cap securities

14 December, 2018

Bank of Cyprus Holdings, the LSE and CSE-listed parent of the island’s biggest lender, has received the green light from the Irish authorities to issue EUR 220 mln in fixed-rate capital securities, carrying an initial 12.5% coupon renewable every five years.


 The issue is expected to boost the bank’s total capital ratio by 140 basis points and improves its liquidity at a time when it has been trying to lower its vast non-performing loans portfolio and deleverage its non-core assets, the latest deal being the sale of its mortgage portfolio in the UK.

On the other hand, the bank has recently proceeded with two major loan-for-equity swaps, taking on the EUR 150 mln debt of majority shareholders in the newly opened Nicosia Mall, and also the EUR 228 mln from the Limni Golf Resort, formerly the jewel in the crown of the NK Shacolas empire.

The FRCS issue, a common instrument that offers investors a combination of the features of corporate bonds and preferred stock, was first announced in August and “privately placed to a small number of institutional investors.”

HSBC Bank and Citigroup Global Markets acted as advisors to the issue.

The issuance of the capital securities will take place on the Luxembourg exchange on December 19 and is conditional upon BOCH completing the reclassification of share premium to distributable reserves, which was the subject of a shareholders' resolution during the last annual general meeting.

The bank had announced that “the capital securities are perpetual and can be redeemed (in whole but not in part) at BOCH's option on the fifth anniversary of the issue date and each subsequent fifth anniversary and will carry an initial coupon of 12.50%, resettable every five years.

Coupon payments are discretionary, non-cumulative and subject to mandatory cancellation under certain conditions. 

The Capital Securities are intended to qualify as Additional Tier 1 capital under the EU Capital Requirements Regulation.

In an earlier announcement, the bank had also said: “Whilst the capital securities will be unlisted at the time of issuance, BOCH intends to obtain a listing of the capital securities on a recognised stock exchange before the first scheduled coupon payment date, which is expected to be in June 2019.”

It added: “The proceeds of issue of the capital securities are intended to be on-lent by BOCH to its subsidiary, Bank of Cyprus Public Company Limited, and will be used by the bank for general corporate purposes.”