Cyprus Mail

BoC acquisition of Russian bank was all ‘above board’

By Elias Hazou

THE 2008 ACQUISITION of Uniastrum by Bank of Cyprus (BoC) was above aboard, and talk of kickbacks to grease the deal is pure fantasy, the co-founder and chairman of the Russian lender has said.

In an interview with Politis published on Monday, George Piskov categorically dismissed allegations of corporate malfeasance with regard to the transaction. Asked directly by the paper as to whether he personally received kickbacks in the deal, the financier denied this.

Piskov went on to disclose his intention to buy back the share in Uniastrum sold to the Cypriot bank in 2008.

BoC had paid a little over €400m for an 80 per cent stake in the Russian bank. The deal came in the wake of the demise of Lehman Brothers that triggered the global financial crisis.

That transaction is now under the authorities’ microscope as part of a broad criminal probe here into the near-collapse of the Cypriot financial sector. Some say BoC paid too much for the Russian bank.

By 2006 Uniastrum had expanded to some 200 branches, but needed a foreign investor for further growth. The bank was approached by various suitors, but decided to go with BoC because its expansion model seemed to be the “most logical” and compatible with Uniastrum’s goals at the time, Piskov said in the interview.

The deal with BoC involved increasing the Russian bank’s share capital by €50m following the buy-out. But reports in the Cypriot press have been suggesting that the €50m were in fact bribes that ended up in offshore accounts.

But Piskov, who retains a 10 per cent stake in the bank (the other 10 per cent is held by his co-founding partner Gagik Zakarian) insists the €50m in equity has stayed in the bank.

This, Piskov stressed, can be verified through Russia’s Central Bank, which has never since raised a red flag over the increase in Uniastrum’s share capital.

Of the €50m, the banker said that he and Zakarian each put up €5m, with the remaining €40m in extra capital coming from the BoC – a claim also made by former BoC strongman Andreas Eliades during testimony before a panel of inquiry.

And the price BoC paid for Uniastrum was “fair”, the Russian financier told Politis.

What’s more, the transaction had been given the seal of approval by the respective regulatory authorities in both Cyprus and Russia, Piskov said.

The banker cited also a findings report by financial forensic experts Alvarez and Marsal (A&M) which found no evidence of corruption.

A&M said the Cypriot bank went ahead with the purchase despite misgivings in due diligence reports and a legal opinion that judged it could opt out of the deal or renegotiate the acquisition price.

Piskov expressed disappointment at the aftermath of the merger, revealing that he would be interested in buying back from BoC the 80 per cent stake – though at a lower price, “given the current circumstances”.

While owned by BoC, Uniastrum has not been affected by the capital controls in place in Cyprus, nor have its customers suffered a ‘haircut’ on their deposits.

Bank of Cyprus (BoC) last week reported a €2.2 billion net loss for 2012 on rising provisions for loans and declining profits.


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