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CYPRUS: Co-op Bank capital issue ‘at an advanced stage’

22 August, 2017

Plans to raise the government-owned Cyprus Cooperative Bank’s share capital are at an advanced stage, attracting interest by foreign investment banks, sources told the Cyprus News Agency (CNA).


 
At the same time, Finance Minister Haris Georgiades told CyBC radio that the aim is to issue free shares and to proportionally reduce the government’s stake in the bank, which it had rescued with two bailouts worth a total EUR 1.67 bln in 2014 and 2015.
However, this decision came under harsh criticism from opposition parties that called the capital issue a blatant sale of a national asset that should have been returned to the public.
Under the Co-op’s restructuring plan, agreed with the EU Directorate General on Competition and as part of the Cyprus financial rescue plan, the state should reduce its stake to below 25% by 2020, beginning next year.
One way is to list the shares on the Cyprus Stock Exchange and other bourses, while the bank, that has been merged into a single entity, continues with its cost-cutting measures.
The CNA said that the process has attracted interest from global investment banks from New York, Paris, London and Frankfurt which consider the capital raise as feasible. Investment banks will act as advisors in the coming capital raise.
These investment banks, the sources indicated, have welcomed the recent agreement to set up a joint venture with Spanish asset management company, Altamira for the management of the Co-op sector’s non-performing exposures amounting to EUR 7.2 bln and its real estate portfolio amounting to EUR 400 mln.
On Monday, Minister Georgiades stated that the state will dispose of its stake in the CCB share capital, but will not proceed with any sales. The process, he added, will proceed in parallel with but will not substitute or replace the CCB’s capital raise in combination with the CCB’s entry to the Cyprus Stock Exchange.
Last June, the government announced it will distribute 25% of its stake to specified groups of Co-op customers (borrowers who service their loans and depositors) free of charge and did not rule out giving more shares to other groups in the future. The plan, Georgiades said, aims to create a local share capital base in the CCB.