Hellenic Bank announced that it has entered into an agreement to acquire a portfolio of performing loans (the “Transaction”) from RCB Bank Limited, which was previously known as Russian Commercial Bank (Cyprus).
According to a press release, the transaction relates to a portfolio of performing loans with a gross book value of approximately 556 million euros, cash guarantees and other credit balances of approximately 89 million euros and letters of guarantee. of approximately 23 million euros. As part of the Transaction, up to 16 employees of RCB Bank Limited who manage this portfolio will be transferred to the Bank.
Around 75% of loans are Cypriot exposures, while the remaining 25% are EU and UK home loans. The main sector exposures are: 37% real estate and construction, 29% hotels and 19% wholesale and retail trade. Around 54% of Cypriot exposures relate to existing clients of the Bank.
The loan portfolio is well secured and includes performing commercial loans to 103 borrowers. Affected borrowers will be screened for sanctions compliance and AML authorization in accordance with the Bank’s strict supervision to manage all related risks and comply with applicable sanctions imposed on Russia and Belarus. The Bank will have the right to refuse the integration of borrowers who do not meet its standards.
The loan portfolio comprises: Tranche A (concerning Cypriot exposures only) of approximately €292 million and Tranche B of approximately €264 million. The acquisition of Tranche A is expected to be finalized by March 24, 2022, while the acquisition of Tranche B is expected to be finalized by May 31, 2022, subject to relevant due diligence, consent final and all relevant regulatory approvals.
Based on September 2021 figures, the Bank’s sound loan portfolio is expected to increase by around 11%, while the pro forma NPE ratio (excluding APS-NPE) will be reduced to around 13.4% from 14.5 %. The Bank’s risk-weighted assets are expected to increase by approximately €656 million, resulting in a pro forma capital adequacy ratio of 2,000%, compared to 22.3% in September 2021. Following the acquisition of Tranche A, the Bank’s pro forma assets and equity ratio should be around 21.0%.
Oliver Gatzke, CEO of Hellenic Bank, said: In line with the Bank’s strategy to grow its business in Cyprus, the transaction increases the Bank’s corporate lending customer base, provides cross-selling opportunities, enhances its operating income through higher interest income and creates the potential to increase 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 portfolio of performing loans up to c. 556 million euros, related funds on the accounts of the corresponding borrowers and related off-balance sheet commitments.
The loan portfolio sold comprises two tranches – Tranche A of c. €292 million relating to Cypriot and Tranche B exposures of c. 264 million euros relating to Cypriot exposure, other Europe and the United Kingdom. The sale of Tranche A is expected to be completed on March 24, 2022, while the sale of Tranche B is expected to be completed by May 31, 2022, subject to all relevant regulatory approvals.
The loan portfolio is well secured and mainly comprises business loans. Approximately 75% of the loans are Cypriot exposures, while the remaining 25% are commercial property loans in the European Union and the United Kingdom. The portfolio includes exposures to Cypriot and European borrowers in the following main sectors: hotels and accommodation, commercial real estate, construction and development, wholesale and retail trade, industry, food and beverages, renewable energy and education.
The sale of the loan portfolio will further strengthen RCB Bank Ltd’s capital and liquidity cushions and create additional substantial cushions, thus allowing significant absorption capacity for any potential external shocks. The total capital adequacy ratio of RCB Bank Ltd will increase from c. 21% to more than 27%. The Bank’s liquidity must exceed the total amount of all liabilities, which enables RCB Bank Ltd both to fully meet its obligations to all its customers and to maintain sufficient levels of liquid assets for its subsequent operations. RCB Bank is expected to receive a total amount of more than 500 million euros from the sale.
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On the day Russia invaded Ukraine, Russian state bank VTB, which was slapped by the United States with sanctions the same day, transferred its stake in Cyprus’s RCB Bank to the two remaining shareholders, both of which are companies registered in Cyprus.