Nicosia – The deal to acquire parts of the Cyprus Cooperative Bank (CCB) by Hellenic Bank went through last week. Non-performing loans are not part of the deal while Hellenic will take over deposits.
Hellenic Bank announced that its final offer for the acquisition of “certain assets and liabilities” of CCB was approved by both its Board of Directors and the shareholders of CCB last week. The capital plan is subject to approval by the European Central Bank. 900 staff members of CCB are said to be laid off when the acquisition is implemented.
As stipulated in the offer, the acquisition comprises of a balance sheet with a total size of €10.3bln as well as certain business of the CCB that is related to the balance sheet. The balance sheet comprises of a portfolio of primarily performing loans (net loans: €4.6bln), Cyprus Government Bonds (€4.1bln), cash (€1.6bln), customer deposits (€9.7bln) and certain other current liabilities and assets.
The terms of the acquisition will include an Asset Protection Scheme (APS), provided by CCB, whose obligations will be guaranteed by the Republic of Cyprus. The APS will protect parts of the acquired loan portfolio, such as €0.5bln of non-performing exposures (net) and up to €2.1bln of high risk performing loans, against future unexpected losses to Hellenic. The definitive agreements for the acquisition are expected to be entered into as soon as practicable.
Hellenic has offered to pay CCB €74mln in cash as consideration for the acquisition.
Subject to the successful completion of the acquisition, Hellenic is expected to have a performing loan market share of 22% and a customer deposit market share of 31%. Hellenic is expected to expand its services to the 400,000 customers of CCB (some of which are joint customers).
The bank is 77% state-owned and is the leader in the amount of deposits held by Cypriots.
Meanwhile, CCB last Friday froze the savings accounts of a number of its customers with non-performing loans in a bid to force them to come to an agreement with the lender regarding their dues.
The bank said it had frozen term deposit accounts of people who owed money but were not servicing their loans. The freeze depended on the amount the people owed.
If they had more cash in their account than the amount owed then the balance will be withdrawn. If it was less, the whole amount was frozen.
Savings accounts were frozen from €2.500 upwards. Current accounts were not touched.
