Co-ops fair value declines to Euros 603 million

The Cooperative Bank’s fair value declined to Euros 603 million, according to data released by the bank.

On Monday, an extraordinary Annual General Meeting approved a resolution to introduce the total issued share capital of the Bank, totalling 6,036,000,000, of a nominal value of Euros 0.28 each, to the main market of the CSE at a price of Euros 0.10 each. This means that the bank’s fair value amounts to Euros 603 million.

The Cooperative Bank has been nationalised as the state injected a total of Euros 1.67 billion on two occasions to cover its capital shortfall. In the previous fair value assessment carried out in 2015 by audit firm PWC the value of the Cooperative Bank has been calculated to Euros 800 million.

A CCB official has told CNA that since the first assessment carried out in 2015, various developments have impacted the bank’s value. These relate to the decision to refund Euros 111 million to borrowers due to a mistake in applying the base interest rate of the European Central Bank and Euribor, as well as a potential impact to the bank’s capital due to the application of the new International Financial Reporting Standard (IFRS 9) which stipulates that banks should make provisions up front based on expected losses.

The same official pointed out that the bank’s value to equity ratio amounts to 50% which is higher than other Cypriot banks listed on the Cyprus Stock Exchange.

This is an assessment carried out for the purpose of the bank’s entry into the CSE and we believe that this assessment was appropriate, he said, pointing out that due to high NPLs financial institutions are trading on stock exchanges with a significant discount.

The Cooperative Bank’s NPLs amounted in March 2017 to 7.2 billion or 60% of the bank’s loan portfolio. On Monday, the Cooperative Bank announced it agreed with Spanish asset management firm Altamira to set up a joint venture to manage NPLs.

The Central Bank of Cyprus welcomed the decision as a positive development as an additional tool to accelerate the reduction of NPLs.

Source: Cyprus News Agency