Bank of Cyprus plans to sell its Russian operation as part of a restructuring launched by its new chief executive officer John Hourican, a Financial Times report said yesterday.
The move aims to shore up the lender’s capital and refocus on its domestic market a year after it collapsed.
In 2008, BoC- the island’s biggest lender – paid €576 million to buy 80% of Uniastrum Bank from its founders who retained 20%.
“BoC will seek a new owner for Uniastrum Bank,” Hourican who joined BoC last October, told the FT.
“BoC has no role being a retail bank in Russia as it doesn’t really help us at our main Cyprus bank – it is a different brand and has a very different clientele,” he added.
The Russian operation accounts for more than half of BoC’s 300 branches and a third of its 7,700 staff.
Hourican also said he has introduced a scorched earth policy on foreign units.
“We are repatriating any overseas stuff that really doesn’t help the core bank and that only eats up capital,” he added.
Selling Uniastrum would sever one of the ties binding BoC with the Russian market.
Before the crisis, the bank attracted big inflow of deposits, many from Russian oligarchs. But most of these were bailed in after the lender collapsed last year.
BoC has also sold its Ukranian operations to Russia’s Alfa Group as well as a minority stake in Romanian Banca Transilvania and some Serbian loans.
Those deals lifted the bank’s common equity tier one ratio – a key measure of financial strength – to a relatively healthy 10.6 at the end of March.
Hourican said any sale of its Russian operation would need to be capital accretive and was unlikely to happen until next year, providing the Ukraine crisis had abated by then.
BoC, which is being advised by HSBC, also plans to sell its portfolio of UK corporate loans and mortgages that it inherited from its takeover of its failed local rival Laiki Bank last March.
Two-fifths of BoC’s liabilities come from central bank funding with €11.1 billion of emergency liquidity assistance.
Non-performing loans of €12.8 billion make up almost half its balance sheet.
Cyprus Weekly
