Hellenic Bank Public Company Limited (the “Bank”) announces that it has entered into an agreement to acquire a performing loan portfolio (the “Transaction”) from RCB Bank Limited.
The Transaction involves a performing loan portfolio of gross book value[1] of c. €556 mn, related cash collateral and other credit balances1 of c. €89 mn and letters of guarantee1 of c. €23 mn. As part of the Transaction, up to 16 employees from RCB Bank Limited who manage this portfolio will be transferred to the Bank.
About 75% of the loans are Cypriot exposures, while the remaining c. 25% is real estate loans in the European Union and the United Kingdom. The main sectoral exposures are: 37% real estate and construction, 29% hotels, and 19% wholesale and retail trade. About 54% of the Cypriot exposures relates to existing clients of the Bank.
The loan portfolio is well collateralised and comprises of performing business loans to 103 borrowers. The borrowers involved will be vetted for sanctions compliance and AML clearance, in line with the strict monitoring performed by the Bank to manage all related risks and comply with the applicable sanctions imposed on Russia and Belarus. The Bank will have the right to refuse onboarding borrowers that fail to meet its standards.
The loan portfolio comprises: Tranche A (relating to only Cypriot exposures) of c. €292 mn and Tranche B of c. €264 mn. The acquisition of Tranche A is expected to be completed by 24 March 2022, while the acquisition of Tranche B is expected to be completed by 31 May 2022, subject to relevant due diligence, final agreement and all relevant regulatory approvals.
Based on September 2021 figures, the Bank’s performing loan portfolio is expected to increase by c. 11%, while the pro-forma NPE ratio (excl. APS-NPEs) will be reduced to c. 13,4% from 14,5%. The Bank’s risk weighted assets are expected to increase by c. €656 mn, resulting in a pro-forma capital adequacy ratio of c. 20,0%, compared to 22,3% as of September 2021. Upon completion of acquisition of Tranche A, the Bank’s pro-forma capital adequacy ratio is expected to be c. 21,0%.
Oliver Gatzke, CEO of Hellenic Bank said:
In line with the Bank’s strategy of growing its business in Cyprus, the Transaction increases the Bank’s client base in business lending, provides cross selling opportunities, improves its operating income through higher interest income and creates potential for growing its non-interest income.
KPMG Limited acted as the Bank’s Financial Advisor and Georgiades & Pelides LLC as the Bank’s Legal Advisor.
HELLENIC BANK PUBLIC COMPANY LIMITED
[1] With final figures subject to the completion of the Transaction and the fair value assessment.
