Hellenic Bank announces agreement regarding acquisition of Co-op and capital raise

The Hellenic Bank has announced the signing of a business transfer agreement with the Cyprus Cooperative Bank (CCB). The Bank also announced a subscription agreement with BRAVO Strategies III (BSIII) in connection with the associated capital raise.

According to the announcement, made Monday, the Hellenic Bank intends to proceed with an equity capital raise of Euros 150mn at a subscription price of Euros 0.70 per share in cash of which Euros 100mn will be via a pre-emptive rights issue and Euros 50mn will be via a private placement to BSIII.

As part of the capital raise, the Hellenic Bank said that it has agreed with Demetra Investment Public Ltd that it will subscribe for up to Euros 50mn in the pre-emptive rights issue. Under certain conditions, Demetra’s shareholding would not be lower than 20.1%.

The announcement said that through the Acquisition a total balance sheet of Euros 10.3bn of assets, as well as certain business of CCB related to the Acquisition perimeter, will be acquired by the Bank.

The balance sheet comprises of a portfolio of primarily performing loans (net loans of Euros 4.6bn), Cyprus Government Bonds (Euros 4.1bn), cash (Euros 1.6bn), customer deposits (Euros 9.7bn) and certain other current liabilities and assets.

The terms of the Acquisition will include an asset protection scheme (APS), provided by CCB. CCB’s obligations under the APS, the BTA and a transitional services agreement between the Company and the CCB will be guaranteed by the Republic of Cyprus pursuant to a guarantee agreement to be entered into prior to the completion of the Acquisition.

The Company has agreed to pay CCB Euros 74mn in cash as a consideration for the net asset value of the Acquisition perimeter, which is Euros 247mn.

The Acquisition is expected to accelerate the Company’s strategy of strengthening its banking franchise across Cyprus with an enlarged and diversified customer base the Bank noted.

The Company is expected to have a performing loan market share of 22% and a customer deposit market share of 31%, establishing the Company as a leading retail and SME bank in the Cypriot economy it added.

It is also expected to expand its services to the 400,000 customers of CCB (some of which are joint customers with the Company) which, combined with its existing customer base, will lead it to serve most Cypriot households.

The Acquisition is expected to achieve a reduction to the non-performing exposure ratio of the Bank from 52% to 25%.

Source: Cyprus News Agency