Bank of Cyprus sells Uni­as­trum for € 7m

Financial Mirror (Cyprus) - - FRONT PAGE -

Bank of Cyprus has fi­nally dis­posed of its Rus­sian sub­sidiary Uni­as­trum, al­beit for a cash deal of EUR 7 mln, but rid­ding it­self of about EUR 700 mln in risk weighted as­sets.

Fol­low­ing the deal, the last over­seas sub­sidiary ear­marked for sale in an ef­fort to delever­age the bank from “non-core as­sets”, in­clud­ing a sim­i­lar sale in Ukraine last year, its net ex­po­sure to Rus­sia is now re­duced to EUR 114 mln of loans and real es­tate as­sets which will “be re­duced over time”, ac­cord­ing to an an­nounce­ment.

How­ever, the is­land’s largest len­der said it will re­tain its two rep­re­sen­ta­tive of­fices in Moscow and St. Peters­burg.

CB Uni­as­trum Bank LLC op­er­ates a net­work of 120 branches, fo­cus­ing on re­tail and busi­nesses in Rus­sia, and em­ploys 2,000 staff.

BOCY’s 80% stake in the bank and a leas­ing sub­sidiary have been sold to Artem Avetisyan, the ma­jor­ity share­holder in Bank Re­gional Credit, 147th big­gest in Rus­sia by as­sets, and the deal is ex­pected to be com­pleted by the end of the third quar­ter. Dur­ing the fourth quar­ter of 2014, the Group’s oper­a­tions in Rus­sia were re­clas­si­fied and treated as a dis­posal group held for sale.

The an­nounce­ment said that “in light of the de­te­ri­o­rat­ing eco­nomic con­di­tions in Rus­sia since mid-De­cem­ber 2014, the bank pro­ceeded to re­assess its oper­a­tions in that coun­try and sig­nif­i­cantly in­creased the level of pro­vi­sions for im­pair­ment of its loans and other as­sets, re­flect­ing a de­lib­er­ately more con­ser­va­tive stance re­gard­ing the Rus­sian eco­nomic out­look and sig­nif­i­cantly re­duc­ing the group’s ex­po­sure. Specif­i­cally, the bank recorded EUR 289 mln of pro­vi­sions for im­pair­ment dur­ing the fourth quar­ter of 2014 and the first quar­ter of 2015 in re­la­tion to its Rus­sian oper­a­tions. In ad­di­tion to these pro­vi­sions, an im­pair­ment loss of EUR 84 mln was recog­nised against the car­ry­ing value of non-cur­rent as­sets within IFRS 5 mea­sure­ment scope dur­ing the fourth quar­ter of 2014.”

The trans­ac­tion car­ries a nom­i­nal con­sid­er­a­tion of EUR 7 mln and re­sults in an ac­count­ing loss of EUR 29 mln, EUR 24 mln of which is from the tech­ni­cal un­wind­ing of a for­eign cur­rency trans­la­tion re­serve. The re­main­ing EUR 5 mln re­flects a loss against the net book value of the as­sets and val­i­dates the ac­cu­racy of the write downs taken pre­vi­ously.

Deutsche Bank AG, Lon­don Branch, acted as fi­nan­cial ad­vi­sor and Lin­klaters as le­gal ad­vi­sor.

In March, when BOCY re­leased its au­dited re­sults for 2014, the to­tal loss of dis­con­tin­ued oper­a­tions for the year amounted to EUR 303 mln, of which a loss of EUR 299 mln re­lated to the Rus­sian oper­a­tions, EUR 36 mln to the Ukrainian oper­a­tions dis­posed in the sec­ond quar­ter of 2014 and a profit of EUR 36 mln from the Greek oper­a­tions due to the re­ver­sal of a pro­vi­sion recog­nised ini­tially in 2013.

At the time, the bank raised its pro­vi­sions for im­pair­ment of cus­tomer loans in Rus­sia by EUR 30 mln “due to fur­ther in­for­ma­tion which be­came avail­able.”

“The re­sults of the fourth quar­ter were neg­a­tively af­fected by in­creased pro­vi­sions and im­pair­ments in Rus­sia, as well as the clas­si­fi­ca­tion of the Rus­sian oper­a­tions as held for sale,” CEO John Houri­can had said in a state­ment on Fe­bru­ary 25.

Houri­can’s two main ob­jec­tives had been to shrink the bank back to its core ac­tiv­i­ties by selling off un­prof­itable as­sets and to re­duce the bank’s high risk ex­po­sure to non­per­form­ing loans, cur­rently run­ning at a na­tional av­er­age of 50% of all loans.

In state­ments re­leased to the media, the bank said it has delever­aged its bal­ance sheet by EUR 3.5 bln, dis­pos­ing of its Ukra­nian oper­a­tions, its in­vest­ment in the Ro­ma­nian Banca Tran­sil­va­nia, its loans in Ser­bia, as­sets in Ro­ma­nia and the UK loan port­fo­lio ac­quired from Laiki Bank.

“The bank is run­ning a process to dis­pose of its oper­a­tions in Rus­sia,” the state­ment added, sug­gest­ing that Uni­as­trum, it­self at the heart of a strug­gle by con­trol by its for­mer own­ers Gagik Zakaryan and Ge­orge Peskov, would no longer bur­den the Group with a de­te­ri­o­ra­tion of its loan­book and de­posits.

Re­cent Rus­sian news re­ports sug­gested that the main con­tenders for Uni­as­trum in­cluded Alfa-Bank and BaltIn­vest­bank, but that Avetisyan’s Bank Re­gional Credit had made the best of­fer.

On June 1, Uni­as­trum’s cap­i­tal amounted to 6.6 bln rou­bles (EUR 110 mln) and with as­sets of 50.6 bln rou­bles (EUR 820 mln) was ranked 102nd big­gest in Rus­sia.

Ac­cord­ing to In­ter­fax-CEA, Kostroma-based Bank Re­gional Credit is the 147th big­gest by as­sets of 26.4 bln rou­bles (EUR 430 mln), less than half of Uni­as­trum, and has 18 of­fices.

Newspapers in English

Newspapers from Cyprus

© PressReader. All rights reserved.