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Bank of Cyprus says sale of Russian Uniastrum Bank completed

Xinhua, July 17, 2015 Adjust font size:

The Bank of Cyprus said on Friday that it had reached an agreement completing the sale of Uniastrum Bank and other Russian assets at a nominal consideration of seven million euros (about 7.6 million U.S. dollars).

A bank statement issued here said the sale was in line with its policy to reduce overall net exposure and followed a similar disposal in Ukraine, completing the disposal of overseas banking subsidiaries identified for sale.

Bank of Cyprus became the first bank in the world to recapitalize by seizing almost half of large deposits as part of the 2013 bailout of Cyprus. It was also forced to sell most of its overseas business, most notably its lucrative operations in Greece, and also in Ukraine and Russia.

The acquisition of the Russian Uniastrum Bank in 2008 was part of judicial proceedings against former officials of the lender who are under investigation for alleged extravagant investments and mishandling of funds.

The bank statement said the transaction completing the sale of the Uniastrum Bank resulted in an accounting loss of 29 million euros.

But it said Bank of Cyprus "has reached another milestone in its deleveraging and de-risking strategy," adding that its operations in Russia were classified and treated as a disposal group for sale, in light of the deteriorating economic conditions in Russia since mid-December 2014.

The bank also said the sale reduced its overall net exposure in Russia to 114 million euros, expected to be reduced over time, as "part of its strategy of focusing on core businesses and markets and disposing of operations that are considered as non-core."

"This sale allows the group to de-risk its balance sheet by approximately 700 million euros and allows the release of risk weighted assets of approximately 700 million euros. The sale improves its regulatory capital position, with a positive impact of around 30 basis points on the group's common equity tier 1 capital ratio," said the bank's statement.

A separate statement issued in Moscow said the bank's share in Uniastrum would be sold to Artyom Avetisyan, the majority shareholder in Russia's Regional Credit Bank. (1 euro = 1.09 U.S. dollars) Endit