A UKRAINIAN court has frozen the ownership of the local units of two stricken Cypriot banks, making it impossible for them to sell off in the short term more than €240 million of assets held in Ukraine.
Rulings posted on the Ukrainian court’s online database show the Kiev commercial court had imposed the freeze on subsidiaries of Bank of Cyprus (BoC) and Laiki Bank, pending lawsuits brought by two locals in protest at heavy losses imposed on large depositors.
Depositors in the two banks stand to lose up to 60 percent of their deposits above €100,000 after a €10 billion March rescue demanded massive contributions from savers.
BoC’s Ukrainian unit told Reuters in an email the court had barred it from selling assets. The court used the same wording with regard to Laiki’s subsidiary.
A Nicosia-based spokesman for BoC said the group would not comment on the proceedings at this stage. He declined to answer questions on whether the bank was planning to sell down its Ukrainian assets as part of its rehabilitation.
“Although the (Ukrainian unit of the) Bank of Cyprus will continue to follow court rulings until they are cancelled, such rulings do not in any way affect the work of the bank,” BoC’s Ukrainian office said.
The full impact on savers of the Cyprus bailout won’t be known until the end of the month, when the value of the banks’ portfolios has been fully assessed.
This Saturday, 75 days after the restructuring decisions were taken, is the cut-off point for legal actions against the measures and depositors associations in Cyprus are expected to also file suits.
The Ukrainian case involves two local companies who bought the claims of two parties who originally held deposits at the banks.
A Ukrainian firm called RVT Trans is suing Laiki for $4.7 million, while another called Luksori Smart is seeking €11.2 million from BoC.
Following requests from plaintiffs, the court last month ordered shares in both bank’s Ukrainian subsidiaries to be frozen. It was unclear how long the trials themselves itself could take.
BoC’s website said it had assets worth about €240 million in Ukraine on April 1, 2013, and shareholders’ funds of almost €70 million supporting a business with 44 branches in 14 regions.
Laiki’s Ukrainian subsidiary, PJSC Marfin Bank, had 59 branches according to the bank’s most recent annual report, dated 2011.
Bank of Cyprus took over some of Laiki’s international businesses in Romania and the UK, but the Ukrainian operations remain part of Laiki, which is being wound down for the benefit of its creditors. Laiki’s Nicosia-based spokesman did not respond to requests for comment. (Reuters)