NICOSIA: Bank of Cyprus, the EU member's largest lender, announced Friday it has sold off its Russian subsidiary Uniastrum as part of what it called a "de-risk strategy".
BoC said the sale follows a similar deal in Ukraine and completes the disposal of the group's overseas banking subsidiaries identified for sale.
It reached agreement to sell 80 percent of its 120 Uniastrum branches and other Russian loan exposures to Artem Avetisyan, the majority shareholder in Bank Regional Credit, the bank said in a statement.
The sale is subject to regulatory approvals and is expected to be completed by the end of the third quarter of 2015, said BoC. without disclosing a price.
The Cypriot bank paid 450 million euros ($490 million at the current exchange rate) to buy 80 percent of Uniastrum in October 2008.
"The transaction results in an improvement of approximately 30 basis points in Common Equity Tier 1 capital ratio due to the reduction of approximately 700 million euros in risk weighted assets," BoC said.
"The (BoC) Group has reached another milestone in its deleveraging and de-risking strategy, and has eliminated future potential risks relating to its Russian operations, including any liquidity risks," BOC said.
"Following the disposal, the overall net exposure of the Group in Russia will be limited to 114 million euros relating to loans and real estate assets, expected to be reduced over time."
In March 2013, Cyprus clinched a painful 10-billion-euro loan from the European Union and International Monetary Fund to bail out its troubled economy and oversized banking sector.
Under the controversial deal, the government was required to close the island's second-largest bank, Laiki, and impose a 47.5 percent haircut on deposits above 100,000 euros at BoC.
It was the first such haircut in the eurozone and many of those burnt were wealthy Russians. Hundreds of Cypriots who had invested in bank bonds were also left out of pocket.
BoC has since undergone major restructuring, which has included the sale of overseas assets and a one-billion-euro recapitalisation that attracted foreign shareholders such as US private equity investor Wilbur Ross.
And a shakeup of its board saw former Deutsche Bank chief executive Josef Ackermann appointed chairman of BoC, which retains two representative offices in Moscow and Saint Petersburg.
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