In a deal worth €97.5 mln Bank of Cyprus has finally offloaded unwanted insurance firm CNP when acquiring it by default after Laiki Bank was shut down during the 2013 bailout debacle.
The bank has agreed to the sale of its 49.9% stake in CNP Cyprialife and CNP Asfalistiki to French company CNP Assurances which has the controlling 50.1% holding in CNP Cyprus Insurance.
This ends a marriage of inconvenience as BoC didn’t want CNP – but acquired it after absorbing the assets of Laiki — as it already operated rival insurance firms Eurolife and General Insurance.
The deal – to be paid in cash — is expected to be completed in the second half of 2019, subject to approval by the regulatory authorities.
A BoC statement said: “The sale enables the Group to focus on its core assets and is in line with the Group’s strategy of delivering value for shareholders. The Group will continue to offer insurance services through its wholly owned insurance subsidiaries.”
Completion of the sale is expected to have a positive impact of c.30 bps1 on both the Group’s CET1 ratio and Total Capital ratio.
The carrying value of the bank’s investment in CNP CIH was €119 mln as at 31 March 2019. The accounting loss from the sale is estimated at €22 mln.
CNP CIH is the parent company of a group of insurance companies in Cyprus and Greece.
It owns a 100% shareholder in CNP Zois which offers life insurance services in Greece, CNP Asfalistiki, a general insurance provider in Cyprus, CNP Cyprialife, which offers life insurance services in Cyprus and CNP Cyprus Properties Limited, an investment holding company.
Xavier Larnaudie-Eiffel, Deputy CEO of CNP said: "The result further strengthens our subsidiary's leading role in Cyprus, expanding its work with full support from the teams in Paris. We intend to contribute even further to the growth of the insurance market in Cyprus".
In a statement, the executive director of the group, Takis Pheidias, said: "This agreement releases important forces of the CNP Cyprus Group, consolidating new prospects for strategic development".
BoC acquired the stake in CNP when Laiki Bank went to the wall as part of a harsh 2013 bailout agreement that included a haircut on deposits.
Things got off to a bad start after CNP demanded that BoC promote its products through its branch network as in the agreement with Laiki.
The thorny issue went to international arbitration, which ruled in favour of BoC saying it did not inherit Laiki’s contractual obligations to sell CNP products.
