By Michele Kambas
Bank of Cyprus, a lender forced to use depositors’ savings to recapitalise itself last year, is examining funding and capital options with advisers, it said on Friday.
Bank insiders, and a person familiar with the matter, said the bank was looking at a potential capital issue of between 500 and one billion euros, but the timing and the precise amount was still unclear.
The bank said it was assessing potential investor interest and would make a further announcement “when and if there is further tangible progress”.
The bank said the capital proposals sought to expedite the implementation of the Group’s restructuring plan in tandem with the further strengthening of the Group.
HSBC and Credit Suisse were advising the bank.
The biggest Cypriot lender was forced to convert a large portion of client deposits to equity last year when international lenders refused to shore up the bank.
The process, known as a “bail-in”, marked the first time in the history of the euro zone debt crisis that distressed banks used client funds to recapitalise, instead of EU tax payers.
Based on its first-quarter results, Bank of Cyprus had a core tier 1 capital, a ratio of financial strength, of 10.4 percent, increasing slightly to 10.6 percent from the disposal of Serbian assets in May.
Under stress test baseline scenarios it should exceed 8 percent, and in an adverse scenario 5.5 percent.
The Cypriot bank is one of more than 100 across the eurozone which will be assessed by regulators under simulated conditions of financial stress. (Reuters)