22.03.2022
RCB Bank Limited, the third largest lender in Cyprus, has announced that it has entered into an agreement with Hellenic Bank Public Company Ltd for the sale of up to €556 million in performing loan portfolio, related funds held in the accounts of eligible borrowers and related parties.
The agreement came after the Bank announced on 24 February that 46.29% of the shares held by the Russian bank VTB were acquired by other current shareholders of the Bank of Cyprus. VTB is among the Russian organizations that came under sanctions after Russia’s invasion of Ukraine. The change in the shareholder structure has not yet received regulatory approval.
In today’s announcement, RCB stated that it expects to receive a total amount of more than 500 million euros, noting that “the bank’s liquidity must exceed the total amount of all liabilities, which allows RCB Bank Ltd to fulfill its obligations to all of its customers in full, as well as maintain an adequate level of liquidity. assets for its future activities.
According to the bank, the credit portfolio being sold consists of two tranches. Tranche A of about 292 million euros related to the Cypriot risks and tranche B of c. €264 million relating to Cypriot, other European and UK risks.
The sale of tranche A is expected to be completed on March 24, 2022, and the sale of tranche B by May 31, 2022, subject to receipt of all relevant regulatory approvals, the bank added. According to the bank, around 75% of loans are Cypriot loans, with the remaining around 25% coming from commercial properties in the European Union and the UK.
The portfolio includes exposure to Cypriots and other European borrowers in the following key sectors: hotels and housing, commercial real estate, construction, wholesale and retail, manufacturing, food and beverage, renewable energy and education, the report said.
“The sale of the loan portfolio will further bolster RCB Bank Ltd’s capital and liquidity buffers and create additional substantial buffers that will significantly absorb any potential external shocks. RCB Bank Ltd’s total capital adequacy ratio will increase from c. from 21% to over 27%, the bank added.
For its part, Hellenic Bank stated that the acquisition of tranche A is expected to be completed by 24 March 2022 and the acquisition of tranche B is expected to be completed by 31 May 2022, subject to appropriate due diligence, final agreement and all relevant regulatory approval requirements.
According to Hellenic, the Bank’s performing loan portfolio is expected to increase by around 11%, while the estimated NPE ratio (excluding APS-NPE) will drop to c. 13.4% from 14.5%.
The Bank’s risk-weighted assets are expected to increase by c. €656 million, bringing the estimated capital adequacy ratio to around 20.0% compared to 22.3% as of September 2021.Upon completion of the acquisition of Tranche A, the Bank’s estimated capital adequacy ratio is expected to be c. 21.0%, Hellenick said.
Oliver Gatzke, CEO of Hellenic Bank, said in a statement that, in line with the bank’s strategy to develop its business in Cyprus, the transaction increases the bank’s business lending customer base, provides cross-selling opportunities, increases its operating income through higher interest income and creates potential for the growth of its non-interest income.
