Cyprus Mail
Business Cyprus

Russian concerns interested in BOC’s Uniastrum stake

By Staff Reporter

AT LEAST two Russian concerns have reportedly expressed an interest in acquiring Bank of Cyprus’ stake in its Russian subsidiary Uniastrum, but the behind-the-scenes manoeuvres seem to suggest a split at the upper echelons of the Cypriot lender.

Local papers report that Rossiyskiy Kredit Bank (RKB) has approached Bank of Cyprus (BoC) with an offer to buy out the latter’s 80 per cent stake in Uniastrum. The divestment of Russian operations in general is part of Bank of Cyprus Group’s restructuring plan, drawn up after the shakeup at the lender resulting from last year’s Eurogroup decisions.

BoC purchased 80 per cent of Uniastrum in the summer of 2008 for around €400m. The loss-making Uniastrum has loans of €1.4b and deposits of €900m on its books.

The overtures from RKB for Uniastrum date back to October 2013, when the Russian bank addressed a letter to BoC CEO John Hourican and BoC chairman Christis Hassapis.

According to Phileleftheros, BoC then indicated that it was open to the offer, and in November asked the Russian suitor bank to follow up by furnishing data on its own balance sheet. RKB complied, and the next step would have been a meeting between the leaderships of RKB and the BoC.

But because the meeting did not materialise for some time, RKB is said to have approached the Russian consulate here in a bid to get the wheels turning. The Consulate of the Russian Federation, represented by a Cypriot law firm, then wrote a letter to Hourican and Hassapis to nudge things forward. Again, however, there was no progress.

That is, until March of this year when the BoC board was in Moscow. There, writes daily Politis, an informal meeting was arranged between, on the one hand, BoC boss Hourican and the bank’s vice-chairman Vladimir Strzhalkovskiy, and RKB on the other.

The meet was apparently arranged unbeknown to the Cypriot law firm representing RKB’s interests in Cyprus. At the gathering, Strzhalkovskiy laid down a condition: that in order for a deal on Uniastrum to go forward the agreement must be brokered by a Cypriot law firm other than the one that was previously designated. Politis says that Strzhalkovskiy even named the Cypriot law firm he had in mind.

The same peculiar condition – switching law firms – was repeated by BoC during the course of a second informal meeting in Moscow taking place last Friday.

In the meantime, about a month ago, a Russian company registered in Cyprus also communicated to Hourican and Hassapis its interest in Uniastrum – bringing the number of suitors to at least two. Politis says the BoC board is set to convene on April 24 to be briefed on the prospective buyers for Uniastrum.

In the midst of all this, the BoC board is considering designating a deputy CEO for the bank. Phileleftheros reports that the board is leaning toward someone from either Cyprus or Greece to fill the number two position in the bank.

It’s speculated that the move may be a power play by the board, keen to check the powers of Hourican. Hourican, formerly with the Royal Bank of Scotland, was appointed CEO last October. His chief remit is to chase down large debtors and bring the bank’s massive non-performing loans under control. In a recent interview with Reuters, Hourican did not rule out the creation of a “bad bank” into which billions of troubled assets would be transferred.

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