The financial position of the Bank of Cyprus

The Central Bank of Cyprus (CBC), acting as the Resolution Authority, notes that so far significant progress has been made in the effort to normalise operations and stabilise the financial position of the Bank of Cyprus. The various steps taken so far are as follows:

1.    Conversion of 37,5% of deposits. The conversion of 37,5% of deposits into shares has been completed and the Bank's customers have been informed accordingly. The final percentage of deposits that may be required to be converted into capital will depend on the outcome of an independent valuation of the assets and liabilities of the bank. The selection process of an independent firm that will conduct the assessment has been completed and its appointment will be made when the vacant positions on the CBC Board are filled. The filling of these vacancies is necessary in order to have the required quorum for a decision of appointment. 

2.    Appointment of the Bank of Cyprus’s Board of Directors. On 26 April 2013, a Board of 15 members was appointed at the Bank of Cyprus. The role and responsibilities of the Board is consistent with the Memorandum of Understanding. The Board is responsible for determining the future course of the Bank, including the drawing up of a restructuring plan. The key priorities of the Board are to manage liquidity, set up the Bank’s new strategy and compile a restructuring plan by the end of September. The Board is in the process of recruiting a Chief Executive Officer, who is expected to be appointed within the next few days.

3.    Preliminary Consolidated Balance Sheet. The initial, preliminary consolidated balance sheet of the Bank of Cyprus, which includes the assets and liabilities transferred from Laiki Bank, has been completed and is presented below. The preliminary consolidated balance sheet represents a Core Tier 1 capital adequacy ratio of 13%, including deposits subject to legal proceedings and 12% excluding these deposits.

As a result of the above actions, the Bank of Cyprus currently has high a capitalisation, an adequately staffed Board of Directors and satisfactory procedures of internal governance.

* after the sale of Greek operations

 Notes

1. The pro-forma balance sheets are subject to the final independent valuation exercise

2. The capital issued in the Laiki Transfer B/S reflects the surplus of Assets over Liabilities minus the fair value adjustments

3. The Balance Sheet does not include the Greek assets and liabilities transferred to Piraeus Bank