The Cooperative Central Bank issued a total of 331,431,090 shares to the government-owned Recapitalisation Fund which is now owner of almost 21.9 per cent of the bailed-out lender, after finance minister Harris Georgiades signed a decree posted in the government gazette on Friday.
The share issue, part of the process which aims at listing the Cooperative Central Bank’s share on the Cyprus Stock Exchange by the end of the year, was based on a valuation of the bank by PricewaterhouseCoopers (PWC) at €1.1155, Dionysis Dionysiou, a finance ministry official in charge of managing the government’s participation in the bank’s capital, said in a telephone interview on Monday.
Following the share issue, the government’s direct participation in the bank, in which it injected €1.5bn in 2014 and, through the Recapitalisation Fund, a further €175m in December, is subsequently diluted from 99 per cent to over 77.3 per cent, according to the decree. Various cooperative participation companies saw their share in the bank’s capital diluted from 1 per cent to below 0.8 per cent.
The bank’s will split its 1,515,113,824 shares 4 to 1 with a nominal value of €0.28 ahead of the listing on the exchange, Dionysiou said. “The split aims at facilitating trading at a price per share similar to that of Bank of Cyprus”.
The Cooperative Central Bank is scheduled to file an application for listing on the exchange at the end of September after the lender posts its net earnings for the first half of 2016, based on a new valuation of the bank, he said adding that in addition, the Single Supervisory Mechanism is carrying out a separate stress test for each of the four Cypriot banks it supervises, including the co-ops, parallel to that for the 70 largest systemic banks in the EU.
“The procedure is already in progress and the preparation of a prospectus will begin together with all pertinent documents required by the CSE and the Cyprus Securities and Exchange Commission,” he said, adding that the bank already signed an agreement with rating company Moody’s Investors Service.
Dionysiou added that following the listing “unless there are no capital needs,” the bank will begin with the issue of new shares in 2018 worth €400m each time in a six-month interval which will address strategic or institutional investors and the general public.
The issues will continue until the government’s share is diluted to one quarter, he said adding that in case the general public takes advantage of the opportunity to invest in the lender, the government and the public will control 50 per cent of the Cooperative Central Bank’s share capital.