Bank of Cyprus has released some €900mln in fixed term 9-month deposits that matured on Wednesday, convinced that its liquidity position would not be harmed by outflows, especially after the European Central Bank published data showing a marginal increase in local bank deposits for the first time since November.
The deposits were part of the three-way split of nearly 40% of savings that were restructured into 6-, 9- and 12-month deposits in July 2013 to help prop up the island’s biggest lender that had already received some €3.8 bln in a ‘bail in’ recapitalisation from the 47.5% of all deposits above €100,000.
This is the second time the bank has released term deposits as part of the bail-in, with about €900mln in 6-month deposits returned to investors in January.
But just as in that case, deposits will now be able to access only a third, or €300mln of the deposits. The other third will be re-converted into a 3-month deposit maturing on July 31, and the balance converted into a 6-month deposit maturing on October 31.
Other capital controls are still in place, such as opening new bank accounts, transferring up to 30,000 to other accounts, etc., as were imposed by the Eurogroup decisions and the Troika of international lenders last year, to prevent a bank run.
The bank said in an announcement that its “improving liquidity position and specific and deliberate actions to enhance its liquidity through deleveraging are the decisive reasons for the release of the deposits.”
It added that the decision “reflects the bank’s prudent liquidity management and takes into account the improvement in the economic environment.”
The bank is undergoing a process of trying to recover a vast portfolio of non-performing loans, accounting for nearly 50% of its current loan-book and comprising mostly property mortgages, mostly held by large-scale developers.
It has sold its banking operations in Ukraine, as well as a stake in Romania’s Banca Transilvania. It is yet undecided on what to do with the Russian subsidiary bank Uniastrum, in which it holds an 80% controlling stake, but hopes to turn around in order to start generating revenues for the Group once again.
Other non-core assets have already been sold off, including real estate inherited from the now defunct Laiki Popular Bank that was forcibly merged into it.
Bank of Cyprus also hopes to dispose of its CNP Laiki Insurance subsidiary, as it has its own life and general insurance companies, EuroLife and General Insurance, but venture partner CNP from France is not too keen to take control of the other half it doesn’t already own, probably eyeing to sell its own stake to a third party buyer as well.