Cyprus cabinet puts its seal on sale of state-owned bank

Source: Xinhua    2018-06-16 21:20:41

NICOSIA, June 16 (Xinhua) -- Cyprus' cabinet has put its seal on an agreement to sell the state-owned Cyprus Cooperative Bank (CCB) to Hellenic Bank, government spokesman Prodromos Prodromou said on Saturday.

Prodromou said the acceptance of the agreement at a special meeting on Friday night was conditional on Hellenic Bank submitting a binding recapitalization plan before CCB convened a general meeting on Monday to give its final approval to the deal.

Hellenic Bank, Cyprus's third largest lender, which made a proposal to acquire the good business part of CCB, said in a statement that it has submitted a new proposal, which CCB said it will examined at general meeting on Monday.

Prodromou said that the proposal outlines that Hellenic Bank will be subject to a capital raise and will undertake payment of the CCB's total deposits.

Hellenic will also take on the CCB's assets consisting of performing loans, bonds and cash, plus around 500 million euros (580 million U.S. dollars) in non-performing loans, he said.

The state has already taken on around 6-billion-euro worth of non-performing loans, after it deposited 2.5 billion euros in CCB last month as the bank was facing a possible run on deposits following rumors about its viability.

Prodromou said the state will pass on all non-performing loans it owns to a new body to be set up to deal with the non-performing loans owned by all banks, a legacy of their 2013 resolution as part of Cyprus's bail-out.

He also said that the state will make an additional deposit of 1 billion euros to the CCB in exchange for performing loans worth 500 million euros and all of the Bank's immovable property, worth 600 million euros.

Finance Minister Harris Georgiades said that this transfer of assets to the state is necessary to render the state's public debt manageable.

The deal to sell CCB, which brinks to an end 109 years of cooperative banking, has to be approved by the European Central Bank and the European Stability Mechanism.

Prodromou said he was confident they will give their approval as the process for the selling of CCB was closely watched and supervised by the two European watchdogs.

The Minister of Finance defended the government's action in selling a banking institution that came into being through the savings of tens of thousands of people over the last century.

He said that bad management and corruption had brought the system to a collapse point, forcing the state to buy it in 2012 by injecting 1.8 billion euros and to further intervene when in 2013 "the CCB had 300 million euros negative working capital".

He said the alternative to the selling of the bank was a new "haircut", meaning the impairment of deposits to recapitalize CCB, like Bank of Cyprus did in the world's first bail-in in 2013 when it seized 47.5 per cent of uninsured deposits over 100,000 euros to replenish its capital.

Editor: zh
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Cyprus cabinet puts its seal on sale of state-owned bank

Source: Xinhua 2018-06-16 21:20:41

NICOSIA, June 16 (Xinhua) -- Cyprus' cabinet has put its seal on an agreement to sell the state-owned Cyprus Cooperative Bank (CCB) to Hellenic Bank, government spokesman Prodromos Prodromou said on Saturday.

Prodromou said the acceptance of the agreement at a special meeting on Friday night was conditional on Hellenic Bank submitting a binding recapitalization plan before CCB convened a general meeting on Monday to give its final approval to the deal.

Hellenic Bank, Cyprus's third largest lender, which made a proposal to acquire the good business part of CCB, said in a statement that it has submitted a new proposal, which CCB said it will examined at general meeting on Monday.

Prodromou said that the proposal outlines that Hellenic Bank will be subject to a capital raise and will undertake payment of the CCB's total deposits.

Hellenic will also take on the CCB's assets consisting of performing loans, bonds and cash, plus around 500 million euros (580 million U.S. dollars) in non-performing loans, he said.

The state has already taken on around 6-billion-euro worth of non-performing loans, after it deposited 2.5 billion euros in CCB last month as the bank was facing a possible run on deposits following rumors about its viability.

Prodromou said the state will pass on all non-performing loans it owns to a new body to be set up to deal with the non-performing loans owned by all banks, a legacy of their 2013 resolution as part of Cyprus's bail-out.

He also said that the state will make an additional deposit of 1 billion euros to the CCB in exchange for performing loans worth 500 million euros and all of the Bank's immovable property, worth 600 million euros.

Finance Minister Harris Georgiades said that this transfer of assets to the state is necessary to render the state's public debt manageable.

The deal to sell CCB, which brinks to an end 109 years of cooperative banking, has to be approved by the European Central Bank and the European Stability Mechanism.

Prodromou said he was confident they will give their approval as the process for the selling of CCB was closely watched and supervised by the two European watchdogs.

The Minister of Finance defended the government's action in selling a banking institution that came into being through the savings of tens of thousands of people over the last century.

He said that bad management and corruption had brought the system to a collapse point, forcing the state to buy it in 2012 by injecting 1.8 billion euros and to further intervene when in 2013 "the CCB had 300 million euros negative working capital".

He said the alternative to the selling of the bank was a new "haircut", meaning the impairment of deposits to recapitalize CCB, like Bank of Cyprus did in the world's first bail-in in 2013 when it seized 47.5 per cent of uninsured deposits over 100,000 euros to replenish its capital.

[Editor: huaxia]
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