Bank of Cyprus’ agreement with Artem Avetisyan, the majority shareholder in Bank Regional Credit, and to entities under his control will allow the bank “to de-risk its balance sheet by approximately €600 million and allows the release of risk weighted assets of approximately €550 million,” Bank of Cyprus said in an emailed statement today.
“The sale improves the group’s regulatory capital position, with a positive impact of approximately 30 basis points on the common equity tier 1 capital ratio. In line with the previous announcement, the transaction results in an accounting loss of €23 million, comprising a loss of €28 million caused by the technical unwinding of a foreign currency translation reserve and a profit of €5 million against the net book value of the assets”.
On July 17, Bank of Cyprus said that Avetisyan agreed to buy Bank of Cyprus’s stake in Uniastrum at a price of €7 million. Operations in Russia generated a €299 million loss for Bank of Cyprus in 2014, when the bank posted an after tax loss of €261 million. The Cypriot bank paid a total of $576 million for the acquisition of Uniastrum in 2008.
“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,” Bank of Cyprus said.
As a result of the transaction, which is in line with the bank’s decision to focus on core-business and markets, its exposure in Russia is €155 million, compared to €148 million initially announced on July 17, and is expected to decline over time, Bank of Cyprus said. The bank added that it will maintain its presence in the country with its representative offices in Moscow and St. Petersburg.
“As a result of the revised agreement, the remaining exposure includes €42 million arising from the deferred component of an asset swap arrangement, but benefits from the removal of an off-balance sheet exposure amounting to €34 million,” it said.
Source: Cyprus Mail