Bank of Cyprus has reached an agreement for the sale of a portfolio of loans with a gross book value of €2.8bn secured by real estate collateral to Apollo Global Management. The portfolio has a contractual balance of €5.7bn. The net book value of the assets being sold as at 30 June 2018 amounted to €1.5bn. At completion, the bank will receive gross cash consideration of c.€1.4bn. The portfolio comprises 14,024 loans to corporate and SME borrowers, secured over 9,065 properties.
The transaction accelerates the Bank’s strategy of de-risking its balance sheet, resulting in a non-performing exposure ratio improvement of c.10%. The deal is the first NPL disposal by the Bank and represents a significant milestone in the delivery of the bank’s strategy of improving asset quality through the reduction of NPEs.
John Patrick Hourican, Group Chief Executive Officer, commented: “This is a transformative sale for the Bank and is the first meaningful Corporate and SME NPL trade in Cyprus. Since 2014, we have focused on decreasing our stock of NPLs and improving the asset quality of the Bank, and today’s transaction is a significant step forward on our journey of de-risking the balance sheet and enhancing our capital position. There is of course much more work to be done and we remain as focused as ever on continuing to seek solutions, both organic and inorganic, to further improve the Bank’s asset quality position.”
Morgan Stanley, KPMG and Alantra Corporate Portfolio Advisors International acted as financial advisors, Allen & Overy acted as lead English legal advisors, Chryssafinis & Polyviou acted as lead Cypriot legal advisors and Ashurst as legal advisors to Bank of Cyprus in this transaction.
