CB tells Snoras to wait

The Central Bank has decided to postpone evaluating a request by the Lithuanian Snoras Bank, seeking permission to buy a controlling stake in Universal Bank pending the outcome of a court fight between the Bank’s majority owner Universal Life Insurance Co. with Bank of Cyprus.

Snoras had requested Central Bank permission before submitting a bid seeking to buy the 61% of the share capital of UL in USB, with unofficial reports suggesting that the Lithuanian Bank is willing to pay close to book value, or 75 cent per share.

Universal Bank currently has a CYP 7.5 mln market capitalisation with its share price, trading on the CSE trading at 50 cent per share. In the event that Snoras would be allowed to make a 75 cent or near bid, and seeking to acquire 61% of the shares, then the Lithuanian Bank would need to pay just under CYP 7 mln to acquire the stake.

The Central Bank however, told Snoras that it cannot study the request until the outcome of the court battle between UL CEO Andreas Georghiou and Bank of Cyprus over who has the right to purchase the BOC 28% stake in UL.

Georghiou, citing a previous agreement with BOC says he has the right of first option to purchase the shares. Bank of Cyprus on the other hand, claims that Georghiou did not meet its conditions during the 21 days that the Bank gave him to come up with the money and authorization from the CB to buy its stake, which would also increase his indirect stake in USB.

BOC wants to sell its 28% stake to Aspis of Greece for CYP 7.3 mln. Aspis also wants to buy the 35% stake of Laiki held in UL to give it majority control in the third largest life insurance company of Cyprus. The Aspis bid is unofficially favoured by the Central Bank, as it would also help boost the capital of BOC and Laiki and at the same time herald the arrival of Aspis Bank in Cyprus.