Bank of Cyprus rejects Piraeus bid

The Board of Directors of Bank of Cyprus examined the proposal of Piraeus Bank and unanimously decided to reject it. The Board’s decision has been communicated to Piraeus Bank.

Contrary to Piraeus Bank’s stated intentions to date for a collaboration of equals, the proposal essentially provides for the acquisition and absorption of Bank of Cyprus by Piraeus Bank. The consideration of the proposal fails to reflect Bank of Cyprus’ strong profitability and significant growth prospects.

The proposal of Piraeus Bank provides for a consideration of EUR2,00 in cash and 0,36 shares of Piraeus Bank for each Bank of Cyprus share. The proposed consideration represents a total value of EUR10,63 per Bank of Cyprus share based on the closing price of Piraeus Bank on the Athens Stock Exchange on 19 December 2006.

The Board of Directors which convened in the presence of its external advisors concluded that Piraeus Bank’s proposal does not reflect the true value of Bank of Cyprus’ share as it is at the level of the current market price of Bank of Cyprus shares and is significantly below the target prices assigned to Bank of Cyprus’ share by the research departments of international investment houses. In addition the proposal does not incorporate a premium as is customary in this type of transaction.

The Board of Directors of Bank of Cyprus appreciates the interest of Piraeus Bank, but concludes that the proposal is not in the best interest of its shareholders.

The Board of Directors of Bank of Cyprus expressed its full confidence in the strategy followed which has already resulted in impressive profitability increase and has created prospects for further significant growth for the Bank of Cyprus Group.