Hellenic Bank announced that it has entered into an agreement to acquire a performing loan portfolio (the “Transaction”) from RCB Bank Limited, which was previously known as the Russian Commercial Bank (Cyprus).
According to a statement, the Transaction involves a performing loan portfolio of gross book value of around €556 million, related cash collateral and other credit balances of approximately €89 million and letters of guarantee of about €23 million. As part of the Transaction, up to 16 employees from RCB Bank Limited who manage this portfolio will be transferred to the Bank.
About 75% of the loans are Cypriot exposures, while the remaining 25% are real estate loans in the European Union and the United Kingdom. The main sectoral exposures are: 37% real estate and construction, 29% hotels, and 19% wholesale and retail trade. About 54% of the Cypriot exposures relates to existing clients of the Bank.
The loan portfolio is well collateralised and comprises of performing business loans to 103 borrowers. The borrowers involved will be vetted for sanctions compliance and AML clearance, in line with the strict monitoring performed by the Bank to manage all related risks and comply with the applicable sanctions imposed on Russia and Belarus. The Bank will have the right to refuse onboarding borrowers that fail to meet its standards.
The loan portfolio comprises: Tranche A (relating to only Cypriot exposures) of about €292 million and Tranche B of around €264 million. The acquisition of Tranche A is expected to be completed by 24 March 2022, while the acquisition of Tranche B is expected to be completed by 31 May 2022, subject to relevant due diligence, final agreement and all relevant regulatory approvals.
Based on September 2021 figures, the Bank’s performing loan portfolio is expected to increase by about 11%, while the pro-forma NPE ratio (excluding APS-NPEs) will be reduced to approximately 13.4% from 14.5%. The Bank’s risk weighted assets are expected to increase by about €656 million, resulting in a pro-forma capital adequacy ratio of 2000%, compared to 22.3% as of September 2021. On completion of acquisition of Tranche A, the Bank’s pro-forma capital adequacy ratio is expected to be around 21,0%.
Oliver Gatzke, CEO of Hellenic Bank said: In line with the Bank’s strategy of growing its business in Cyprus, the Transaction increases the Bank’s client base in business lending, provides cross selling opportunities, improves its operating income through higher interest income and creates potential for growing its non-interest income.
RCB Bank Ltd announces that it has entered into an agreement with Hellenic Bank Public Company Ltd for the sale of a performing loan portfolio of up to c. €556 million, related funds on the accounts of the corresponding borrowers and related off-balance sheet obligations.
The loan portfolio being sold comprises of two tranches – Tranche A of c. €292 million relating to Cypriot exposures and Tranche B of c. €264 million relating to Cypriot, other European and United Kingdom exposures. The sale of Tranche A is expected to be completed on 24 March 2022, while the sale of Tranche B is expected to be completed by 31 May 2022, subject to all relevant regulatory approvals.
The loan portfolio is well collateralized and comprises of mainly corporate loans. About 75% of the loans are Cypriot exposures, while the remaining c.25% are commercial real estate loans in the European Union and the United Kingdom. The portfolio includes exposures to Cypriot and other European borrowers in the following main sectors: hotels and accommodation, commercial real estate, construction and development, wholesale and retail trade, manufacturing, food and beverage, renewable energy and education.
The sale of the loan portfolio shall strengthen further the capital and the liquidity buffers of RCB Bank Ltd and shall create additional substantial buffers, thus allowing for significant absorption capacity of any potential external shocks. The total capital adequacy ratio of RCB Bank Ltd shall increase from c. 21% to over 27%. The Bank’s liquidity shall exceed the total amount of all liabilities, which enables RCB Bank Ltd both meeting its obligations towards all of its clients in full as well as to maintain sufficient levels of liquid assets for its further operations. RCB Bank is expected to receive a total amount of over 500 million Euros from the sale.
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The day Russia invaded Ukraine, Russian state-owned VTB Bank, which got slapped by the U.S. with sanctions the same day, transferred its stake in Cyprus’ RCB Bank to the two remaining shareholders, both of which are companies registered in Cyprus.