The Bank of Cyprus announced on Monday that it had successfully completed the sale of a non-performing loans (NPLs) portfolio with a gross book value of €577 million, bringing its NPL ratio down to 8.6%.
“I am delighted to announce the signing of the sale of Helix 3 today, by which the Bank achieves a single-digit NPL index, a year earlier than we had indicated to the market,” said the Bank of Cyprus CEO, Panicos Nicolaou in a message to staff.
“The signing of the deal constitutes a significant milestone in our strategy to reduce the risk in the Bank’s balance sheet,” he added.
Beyond the sale of non-performing loans, the Helix 3 deal, also included the sale of real estate properties worth €121 million in total.
The portfolio was sold to the big American investment firm PIMCO and has a contractual balance of €993 million and is comprised of approximately 20,000 loans, the majority of which involved retail clients. Following the completion of the deal, the Bank of Cyprus will receive gross cash compensation of approximately €385 million.
Nicolaou said that the bank was “reaching the end of a long and difficult journey that started in 2014.”
“Overall, since the peak, we have reduced the stock of NPLs by €14.1 billion or 94% to less than €1 billion and the non-performing exposures (NPE) ratio by 54 percentage points, from 63% to less than 9%,” Nicolaou explained.
The bank has described the agreement as a landmark moment in its efforts to upgrade the quality of its portfolio.
“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 NPLs,” the bank said.
In terms of the bank’s CET1 ratio, which compares a bank’s capital against its risk-weighted assets to determine its ability to endure an incident of financial distress, the bank said the deal is expected to have a total positive impact of 66 basis points on the Group’s CET 1 ratio, as well as adding approximately €21 million to the Group’s income statement.
“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%,” Nicolaou concluded.
The deal also involved Morgan Stanley & Co. International plc and Interpath Advisory who acted as financial advisors, Allen & Overy LLP who acted as English legal advisors, as well as Chryssafinis & Polyviou LLC who acted as the Cypriot legal advisors to the bank.
Source: Cyprus Mail
