REG - Bank of Cyprus Hldgs - Agreement for sale of a portfolio of NPLs

Bank of Cyprus HoldingsAnnouncement

15/11/2021 07:05

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RNS Number : 3645S  Bank of Cyprus Holdings PLC  15 November 2021

 

 

Announcement

 

 

Agreement for sale of a portfolio of Non Performing Loans

 

Nicosia, 15 November 2021

 

 

 

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014.

 

 

Bank of Cyprus Holdings Public Limited Company ("BOC Holdings" and, together
with its subsidiaries, the "Group") has reached an agreement with funds
affiliated with Pacific Investment Management Company LLC ("PIMCO"), for the
sale of a portfolio of Non Performing Loans (the "Portfolio") with a gross
book value of €577 mn(1), as well as real estate properties with a book
value of €121 mn(1) (known as "Helix 3", or the "Transaction"). The
Portfolio has a contractual balance of €993 mn(2) and it comprises c.20,000
loans, mainly to Retail clients. At completion, the Bank will receive gross
cash consideration of c.€385 mn.

 

The Transaction represents another milestone in the delivery of one of the
Group's core strategic objectives of improving  asset quality through the
reduction of NPEs. Pro forma for this Transaction, the Group's NPE ratio will
be in single digit.

 

The Transaction reduces the stock of NPEs by 36%(1  )and the properties by
9%(1). On a pro forma basis, in the first nine months of 2021 our NPE stock
reduced by €2.2 bn(1) to €0.9 bn(1), and the NPE ratio to 8.6%(1),
including Helix 3, Helix 2 and organic reductions.

 

Overall, by completion, the Transaction is expected to have a total positive
impact of 66 bps(1) on the Group's CET 1 ratio and c.€21 mn on the Group's
income statement. The impact of the Transaction on the Group's income
statement for 3Q2021 is a net profit of c.€10 mn and a positive impact of 7
bps(1) on the Group's CET 1 ratio.

 

The completion of the Transaction is currently estimated to occur in the first
half of 2022 and remains subject to a number of conditions, including
customary regulatory and other approvals.

 

The Portfolio and the real estate properties included in the Transaction will
be transferred to a licensed Cypriot Credit Acquiring Company (the "CyCAC") by
Bank of Cyprus Public Company Limited (the "Bank"). The shares of the CyCAC
will then be acquired by certain funds affiliated with PIMCO.

 

Following a transitional period where servicing will be retained by the Bank,
it is intended that the servicing of the Portfolio and the real estate
properties included in the Transaction will be carried out by a third party
servicer selected and appointed by the purchaser.

 

PIMCO is one of the world's premier fixed income investment managers. With its
launch in 1971 in Newport Beach, California, PIMCO introduced investors to a
total return approach to fixed income investing. In the 45+ years since, the
firm continued to bring innovation and expertise to their partnership with
clients seeking the best investment solutions. Today PIMCO has offices across
the globe and 2,900+ professionals united by a single purpose: creating
opportunities for investors in every environment. PIMCO is owned by Allianz
SE, a leading global diversified financial services provider.

 

Panicos Nicolaou, Group Chief Executive Officer, commented:

 

"I am delighted to announce the signing for the disposal of Helix 3 today, a
significant milestone in our de-risking strategy, allowing us to early
achieve, by a year, our guidance for a single digit NPE ratio, in a capital
accretive and profitable transaction.

 

We are reaching the end of a long journey that started in 2014. Overall, since
the peak, we have now reduced the stock of NPEs by €14.1 bn(3) or 94%(3) to
less than €1 bn(3) and the NPE ratio by 54 percentage points(3), from 63% to
less than 9%(3).

 

We are pleased with the progress achieved on our medium term strategic
objectives, and remain fully committed and on track to achieve an NPE ratio of
5%."

 

Morgan Stanley & Co. International plc and Interpath Advisory acted as
financial advisors, Allen & Overy LLP acted as English legal advisors and
Chryssafinis & Polyviou LLC acted as Cypriot legal advisors to the Bank in
this Transaction.

 

For further information, please contact Investor Relations at
investors@bankofcyprus.com (mailto:investors@bankofcyprus.com)

 

 

 

(1  )Based on the Group Financial Results for the six months ended 30 June
2021

(2) As at the reference date of 31 May 2021

(3) Based on the Group Financial Results for the six months ended 30 June
2021, proforma for Helix 3 and the organic NPE reduction of c.€300 mn in the
first nine months of 2021

 

 

 

 

 

 

Group Profile

 

The Bank of Cyprus Group is the leading banking and financial services group
in Cyprus, providing a wide range of financial products and services which
include retail and commercial banking, finance, factoring, investment banking,
brokerage, fund management, private banking, life and general insurance. The
Bank of Cyprus Group operates through a total of 91 branches in Cyprus, of
which 11 operate as cash offices. Bank of Cyprus also has representative
offices in Russia, Ukraine and China. The Bank of Cyprus Group employs 3,558
staff worldwide. At 30 June 2021, the Group's Total Assets amounted to €24.2
bn and Total Equity was €2.1 bn. The Bank of Cyprus Group comprises Bank of
Cyprus Holdings Public Limited Company, its subsidiary Bank of Cyprus Public
Company Limited and its subsidiaries.

 

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