Cyprus Mail

Ruling in CNP vs BoC €240m case expected in Q4

The London Court of International Arbitration is expected to issue its ruling in the case of French insurance giant CNP Assurances and its Cyprus unit CNP Cyprialife, which seek a total of €240m in compensation from Bank of Cyprus in the fourth quarter of the year, a source said.

“The hearing of the case, which was initially scheduled for May this year, was postponed to June,” the source familiar with the matter said on condition of anonymity. “Since the court will need about three months to issue its ruling, we expect it to do so towards the end of the year”.

CNP Assurances, which in 2008 acquired a 50.1 per cent stake in Cyprialife from Cyprus Popular Bank, widely known as Laiki (or officially, at the time of the transaction, Marfin Popular Bank), for a total of €145m plus another €20m earn-out linked to business objectives. The CNP-Laiki deal included an exclusive distribution agreement of the CNP Cyprialife products at the bank’s branches. In case of Laiki’s failure to do so, the two sides agreed that CNP Assurances would be entitled to sell back its stake at a price determined by a formula.

Bank of Cyprus, which in 2013 absorbed Laiki’s operations, including the 49.9 per cent shareholding in CNP Cyprialife, is asked to compensate CNP Assurances with €100m for not adhering to the terms of the distribution agreement and another €100m for violating the shareholding agreement plus interest and taxes.

The lender “considers that it has viable defences in respect of both proceedings, which it intends to contest vigorously,” Bank of Cyprus said in its 2015 financial report, adding that one of its defences “is that of frustration, namely that as a result of the very significant changes of March 2013, the agreements as concluded between CNP and Laiki Bank cannot possibly operate in the context of the new situation resulting from the events of March 2013”.
Bank of Cyprus has a 100 per cent stake in Eurolife and General Insurance of Cyprus which operate on the life and non-life insurance market.

According to CNP Assurances, the French company suffered a below-€10m loss at the 2013 bail-in which, in the case of deposits held by insurance companies, was limited to 27.5 per cent of uninsured deposits.

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