Bank of Cyprus sells Ukrainian subsidiary

Bank of Cyprus, the island’s largest lender, on Friday announced the sale of its loss-making PJSC Ukrainian subsidiary to Russia’s Alpha Group, as part of a restructuring drive.

It said an agreement was reached with ABH Ukraine, part of the Alpha Group, to sell its holding of 99.77 percent for 225 million euros.

The sale is subject to approval from regulatory authorities in Cyprus and Ukraine.

“The proceeds of the sale will enhance the bank’s liquidity position,” said Bank of Cyprus.

BoC said the accounting loss from the sale was approximately 158 million euros, representing the difference of the consideration received and the net book value of the business. It said the deal was a “good transaction in order to deleverage and de-risk its balance sheet.”

The sale would also “eliminate future potential risks relating to its Ukrainian investment, particularly given the political and economic environment prevailing currently in Ukraine.”

PJSC Bank of Cyprus was acquired by BoC in 2008. It operates a network of 42 branches, focusing both on individuals and businesses in Ukraine. As of September 30, 2013, the bank had total assets and equity of around 245 million euros and 70 million respectively.

BoC this week released 950 million euros in six-month certificates of deposit it had locked in following the haircut.

The CDs were due to mature on Friday. [AFP]