Bank of Cyprus is reportedly considering the sale of its Russian subsidiary as part of a restructuring initiated by its new chief executive, in a bid to boost capital and refocus on the domestic market following its collapse.
Bank of Cyprus chief executive John Hourican was quoted by The Financial Times as saying that the bank would seek a new owner for the lossmaking Russian unit, Uniastrum Bank, it acquired in 2008.
"Bank of Cyprus has no role being a retail bank in Russia as it doesn’t really help us at our main Cyprus bank – it is a different brand and has a very different clientele," Hourican added, noting that the sale would need to be capital accretive and will not be finalized until 2015, providing the Ukraine crisis subsidised by then.
"I have introduced a scorched earth policy on foreign units. We are repatriating any overseas stuff that really doesn’t help the core bank and that only eats up capital."
Headquartered in Moscow, Uniastrum Bank provides a range of financial products and services for the retail segment, and the small and medium-sized business community, and accounts for more than half of Bank of Cyprus’s 300 branches and a third of its 7,700 employees.
Approximately $576m were paid by Bank of Cyprus to acquire 80% stake of Uniastrum, while the remaining 20% was retained by its founders, according to the news agency.
After taking charge of the bank in October 2013, Hourican has also completed the sale of the lender’s Ukrainian business to Alfa Group, as well as a minority stake in Romanian Banca Transilvania and some Serbian loans.
In addition, the bank, which had to be bailed out by the European Union in 2013, also intends to sell a £300m portfolio of UK corporate loans and mortgages that it inherited from its takeover of Laiki Bank in the same year.
Image: Bank of Cyprus is planning to sell its lossmaking Russian unit, Uniastrum Bank. Photo: Petros3.