Bank of Cyprus sells ex-Laiki ‘Project Av­enue’ loans in UK

Financial Mirror (Cyprus) - - FRONT PAGE -

Bank of Cyprus has agreed to sell its ex-Laiki port­fo­lio of res­i­den­tial and com­mer­cial real es­tate-backed loans in the UK, known as ‘Project Av­enue’ and worth GBP 289 mln (EUR 361 mln) to mort­gage man­agers Mars Cap­i­tal Fi­nance and to Ca­mael Mort­gages. The sale and trans­fer is ex­pected to be com­pleted by Oc­to­ber 31. The bank said the trans­ac­tion “will en­hance the Group’s liq­uid­ity and will have a small pos­i­tive im­pact on the Group’s Common Eq­uity Tier 1 cap­i­tal due to the re­lease of risk weighted as­sets.”

It added that the sale of the loan port­fo­lio was in line with the re­struc­tur­ing plan and strat­egy of delever­ag­ing through the dis­posal of non-core op­er­a­tions and boost­ing its cap­i­tal and liq­uid­ity. An ad­di­tional GBP 261 mln (EUR 325 mln) of gross loans have been delever­aged at par value since March 2013, through re­demp­tions or re­fi­nanc­ing from third par­ties.

HSBC acted as fi­nan­cial ad­viser to the dis­posal of the loan port­fo­lio. The sale price at which Mars Cap­i­tal ac­quired Project Av­enue is not yet known, how­ever, the dis­count is thought to be shal­low owing to the per­form­ing na­ture of the un­der­ly­ing circa 765 loans, said James Wal­lace, Fi­nance Ed­i­tor at CoStar News. Project Av­enue’s loans are ex­tended to a pool of 427 sep­a­rate bor­row­ers which are se­cured res­i­den­tial and com­mer­cial prop­er­ties.

Mars Cap­i­tal was se­lected after a com­pet­i­tive process, which ear­lier was un­der­stood to have in­cluded Mac­quarie Bank, Deutsche Bank and Black­stone. The orig­i­nal Project Av­enue port­fo­lio had an out­stand­ing bal­ance of GBP 296.4 mln. Only last month, Bank of Cyprus con­cluded a deal to sell a real es­tate pack­age in Ro­ma­nia, say­ing it would en­hance its liq­uid­ity by

by more

than 500 EUR 95 mln. The bank said it was sell­ing the as­sets re­lated to So­ci­etatea Com­pani­ilor Hote­liere Grand S.R.L. (“GHES”), owner of the JW Mar­riott Bucharest Grand Ho­tel prop­erty to Stra­bag SE, an Aus­trian company.

It added that the ac­count­ing loss from the trans­ac­tion would be around EUR 1 mln, but there is a pos­i­tive im­pact of EUR 7 mln on the Group’s cap­i­tal po­si­tion, after tak­ing into ac­count the re­duc­tion in risk weighted as­sets.

The bank has been dis­pos­ing of non-core as­sets, in­clud­ing bank­ing op­er­a­tions in the Ukraine, other as­sets held by nowde­funct Popular Laiki and is con­sid­er­ing sell­ing its 80% Rus­sia af­fil­i­ate, Uni­as­trum.

Merg­ing of the Bank of Cyprus and ex-Laiki op­er­a­tions has also saved the group some EUR 5 mln in an­nual rent, while other dor­mant prop­er­ties in Cyprus, Greece and the UK are up for sale.

The Group’s jewel in­surance busi­nesses, EuroLife and Gen­eral In­surance Co., will prob­a­bly stay, as buy­ers are sought for the CNP As­sur­ance business, 51% con­trolled by the French In­surance gi­ant that also wants to dis­pose of its loss-mak­ing Cyprus op­er­a­tions.

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