Bank of Cyprus announced that it has completed the sale of the majority of its Russian operations through the subsidiary BOC Russia (Holdings) Ltd., comprising its holdings of 80% in CB Uniastrum Bank LLC, and 80% in its leasing subsidiary, Leasing Co. Uniastrum Leasing LLC, as well as other Russian loan exposures, to Artem Avetisyan, the majority shareholder in Bank Regional Credit, and to entities under the control of the buyer.
As already stated in the Group’s announcement in July, the decision to sell the Russian operations is part of the Group’s strategy to focus on core businesses and markets and disposing of operations that are considered as non-core. With the disposal of this major overseas banking subsidiary, the Group has reached another milestone in its deleveraging and de-risking strategy, and has eliminated future potential risks relating to its Russian banking operations, including any liquidity risks.
The Group concluded its negotiations with Avetisyan, as a result of which certain revisions to the agreement reached on July 17 were made. This sale allows the Group to de-risk its balance sheet by €600 mln and allows the release of risk weighted assets of €550 mln. The sale improves the Group’s regulatory capital position, with a positive impact of 30 basis points on the Common Equity Tier 1 capital ratio. The transaction results in an accounting loss of €23 mln, comprising a loss of €28 mln caused by the technical unwinding of a foreign currency translation reserve and a profit of €5 mln against the net book value of the assets.
As a result of the transaction, the remaining net exposure (on and off balance sheet) of the Group in Russia is €155 mln, comprising €135 mln on-balance sheet and €20 mln off-balance sheet exposures.
This compares to €148 mln, comprising €114 mln on-balance sheet and €34 mln off-balance sheet exposures as per the announcement on July 17, and is expected to be reduced over time. As a result of the revised agreement, the remaining exposure includes €42 mln arising from the deferred component of an asset swap arrangement, but benefits from the removal of an off-balance sheet exposure amounting to €3l4 mn.
The transaction has received all necessary regulatory approvals and does not affect the bank’s presence in Russia through its two representative offices in Moscow and St. Petersburg.
Deutsche Bank AG, London Branch, acted as financial advisor and Linklaters as legal advisor to the Bank in connection with this transaction.
