BOCY con­cludes Uni­as­trum sale in Rus­sia

Financial Mirror (Cyprus) - - FRONT PAGE -

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.

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 de­risk its bal­ance sheet by EUR 600 mln and al­lows the re­lease of risk weighted as­sets of EUR 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 EUR 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.

The re­main­ing net ex­po­sure (on and off bal­ance sheet) of the Group in Rus­sia is EUR 155 mln, com­pris­ing 135 mln on-bal­ance sheet and 20 mln off­bal­ance sheet ex­po­sures. This com­pares to EUR 148 mln, com­pris­ing 114 mln on-bal­ance sheet and 34 mln off­bal­ance sheet ex­po­sures as per the an­nounce­ment on July 17, and is ex­pected to be re­duced over time. As a re­sult the re­main­ing ex­po­sure in­cludes 42 mln aris­ing from the de­ferred com­po­nent of an as­set swap ar­range­ment.

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