The Cyprus Cooperative Bank (CCB) has begun the process of transferring its business to Hellenic, after the government agreed to sell off the struggling Co-op’s assets.
.jpg)
Officials from both banks told CNA that division directors have had meetings to prepare the transfer which is expected to be completed in September.
According to the deal, Hellenic Bank will acquire a balance sheet of €10.3 bln, comprising a portfolio of primarily performing loans (net loans: €4.6 bln), Cyprus Government Bonds (€4.1 bln), cash (€1.6 bln), customer deposits (€9.7 bln) and other current liabilities and assets.
Hellenic will also absorb 1,100 staff from the Co-ops total 2,700 employees, as well as 73 branches – a compensation package is being worked out for the 900 or so to be made redundant.
In August Hellenic will convene an extraordinary Annual General Meeting to approve a €150-mln capital increase to buffer the deal.
Hellenic said it received irrevocable undertakings by major shareholders to approve the capital increase which is essential to obtain the green light from the ECB’s Single Supervisory Mechanism.
Banking officials said they aimed at a smooth transition for the customers of the CCB. Officials are examining issues concerning system integration and the branch network of the consolidated entity.
Last week Moody’s rating agency put Hellenic Bank and the CCB on review for a possible upgrade.
“The reviews for upgrade of both banks are driven by the Cypriot authorities’ approval of Hellenic’s offer to acquire CCB’s balance sheet consisting of healthy assets, all of its customer deposits, some other liabilities and equity,” Moody’s said.
Parliament has passed legislation providing state guarantees to Hellenic Bank in its acquisition of the Co-op’s healthy portfolio.
It allows the government to offer a financial cushion to organizations on the basis of protecting public interest, essentially approving state protection for Hellenic Bank over absorbing potentially high-risk loans from CCB.
This was deemed necessary to allay customer fears as the Co-op lost hundreds of millions in several min-bank-runs over the past 10 months from jittery depositors.
The CCB is burdened with around 60% of non-performing loans (around €6.4 bln), but these bad loans and toxic assets are not part of the deal.
