Filenews 22 March 2022 - by TheanoThiopoulou
Mobility prevails in the banking scene following RCB Bank's decision to sell to Hellenic Bank a performing portfolio of loans amounting to up to €556 million, relevant deposits in the accounts of the respective borrowers, as well as related off-balance sheet liabilities.
With the movement to sell loans, Hellenic strengthens as the bank's performing loans are expected to increase by approximately 11%, while the adjusted ratio of non-performing loans (NPEs), excluding NPEs covered by the asset protection programme, will decrease to approximately 13.4% from 14.5%.
The Bank's weighted assets are expected to increase by approximately €656m, with the adjusted capital adequacy ratio amounting to approximately 20.0%, compared to 22.3% in September 2021. Upon completion of the acquisition of Part A, the adjusted capital adequacy ratio is expected to be approximately 21.0%.
The transaction increases the Bank's customer base in business lending, provides opportunities for cross-selling, improves its operating income through increased interest income and creates possibilities to increase its non-interest income.
The senior executive director of The Hellenic Oliver Gatzke stated:
"In line with the Bank's strategy to develop its business activities in Cyprus, the Transaction increases the bank's customer base in business lending, provides opportunities for cross-selling, improves its operating income through increased interest income and creates possibilities to increase its non-interest income."
Staff
As part of the transaction, up to 16 employees of RCB Bank Limited who manage this portfolio will be transferred to the Bank.
Loans secured in a sufficiently secure manner
About 75% of the loans relate to Cypriot loans, while the remaining approximately 25% relate to loans for real estate in the European Union and the United Kingdom.
The main areas of the portfolio are: 37% real estate and construction, 29% hotels and 19% wholesale and retail trade. Approximately 54% of the loans in Cyprus are related to existing customers of the Bank.
The loan portfolio is adequately secured and consists of performing business loans to 103 borrowers. The borrowers involved will be audited for compliance with sanctions and anti-money laundering sanctions and regulations, in accordance with the strict monitoring carried out by the Bank to manage all relevant risks and comply with all applicable sanctions imposed on Russia and Belarus. The Bank will have the right not to accept borrowers who do not meet its criteria.
In two phases the acquisition
The loan portfolio consists of: Part A (which concerns only Cypriot loans) amounting to approximately €292 million. and Part B of approximately €264 million. The acquisition of Part A is expected to be completed by March 24, 2022, while the acquisition of Part B is expected to be completed by May 31, 2022, and are subject to a due diligence check, final agreement and all relevant supervisory approvals.
When did the changes begin?
On the first day of Russia's invasion on Thursday, February 24, it was announced that 46.29% of its share capital of RCB Bank, which owned the Russian VTB Bank (PJSC) which has been sanctioned by the US and Britain, had been acquired by the bank's other existing, Cypriot shareholders representing the management of RCB Bank and approval by the ECB is awaited. From then on began the next processes that brought today's result.
What RCB Bank says
The sale of the loan portfolio will be completed in two phases – The first phase amounts to approximately €292 million and concerns financing in Cyprus and the second phase, which amounts to approximately €264 million and is related to financing in Cyprus, the European Union and the United Kingdom. The first phase is expected to be completed in March 2022, while the second phase is expected to be completed in May 2022, subject to all relevant regulatory approvals.
This loan portfolio is well secured and mainly includes corporate loans. About 75% of the loans are for Cypriot financing, while the remaining 25% consists of financing in the European Union and the United Kingdom. The portfolio includes financing to Cypriot and European borrowers active in the following main sectors of the economy: hotel industry, commercial real estate, construction and land development, wholesale and retail trade, manufacturing, catering, renewable energy and education.
€500 million from the sale
The sale of the loan portfolio will further strengthen the capital and liquidity reserves of RCB Bank Ltd and create additional significant reserves, thus allowing for significant capacity to absorb any potential external shocks. The total capital adequacy ratio of RCB Bank Ltd will increase from approximately 21% to over 27%. The Bank's liquidity will exceed the total amount of all its liabilities, which allows RCB Bank Ltd both to fully fulfil its obligations towards all its customers and to maintain an adequate level of liquidity for its further activities. RCB Bank is expected to receive a total amount exceeding €500 million from this sale.
