* Bank of Cyprus attracts U.S., EU investors
* Equity private placement raises 1 billion euros in fresh
* First bank to bail in deposits in euro-zone crisis
(Adds background, description of the equity offering, Bank of
Cyprus CEO's comments)
By Michele Kambas and Laura Noonan
NICOSIA, July 28 Bank of Cyprus, the
Cypriot lender that recapitalised by seizing its clients'
deposits last year, said it had raised 1 billion euros in a
private placement on Monday, drawing in investors from the
United States and Russia as well as from an EU-controlled bank.
The European Bank for Reconstruction and Development, partly
owned by the European Union, and investors represented by U.S.-
based billionaire Wilbur Ross were among the parties signing up
to participate in a 1-billion-euro equity issue pricing Bank of
Cyprus at 0.24 euro per share, the Cypriot bank said.
The issue, which executives said represented the single
largest foreign investment made in Cyprus, would allow the bank
to accelerate implementation of a restructuring plan after it
was almost crippled by onerous terms of a bailout for Cyprus in
Bank of Cyprus made history in the euro zone's debt crisis
as the first bank forced to convert uninsured deposits into
equity as a condition for cash-strapped Cyprus to receive 10
billion euros in bailout aid from the EU and the International
The bank, badly hit by its exposure to debt-crippled Greece,
was under the control of the island's central bank for several
months last year.
Monday's issue will take the bank's core Tier 1 capital to
15.1 percent from its present level of 10.6 percent.
"The success of the private placing demonstrates the
confidence that international institutional investors have in
the Bank's turnaround and the economic recovery in Cyprus, only
a year after the Bank exited resolution status," said CEO John
Hourican, a former RBS senior executive who took over the helm
of the Cypriot bank last November.
Ross, who made his name and his money by resolving
bankruptcies, is known for taking punts on the euro zone's
His earliest - a bet of 290 million euros on the Bank of
Ireland in 2011 at the height of the Irish crisis - made him a
profit of 500 million euros when he sold his stake earlier this
More recently, the 76-year-old American billionaire invested
in the recapitalisation of Greece's Eurobank in April with
fellow Bank of Ireland investor Fairfax Financial. He has also
spoken of exploring opportunities in Italy, Portugal and Spain.
In a statement released through the Bank of Cyprus, Ross
said investors he represented were committed to buying about 40
percent of the placement.
Under a phased-in approach to raising capital, the private
placement is to be followed by offering existing shareholders
the ability to buy into the bank, acquiring up to 20 percent of
the shares offered in the private placement.
Many of those shareholders are among those singed by the
bail-in, which converted 47.5 percent of their cash deposits
exceeding 100,000 euros into equity.
The procedure, known as a clawback, would then adjust
allocations to investors in the private placement so the total
gross proceeds would still remain at 1 billion euros, the bank
said. Technically, that would mean that if existing shareholders
do decide to exercise their right, 200 million euros in new
equity would be allocated to them and 800 million to new
shareholders who subscribed to Monday's private placement.
Pre-clawback, bailed-in depositors will own 53 percent of
shares, a London-based spokesman for the bank said.
The Bank of Cyprus would subsequently make 100 million euros
in new shares available to both new and existing shareholders,
according to the bank.
($1 = 0.7442 Euro)
(Reporting by Michele Kambas in Nicosia; Additional reporting
by Laura Noonan in London; Editing by G Crosse and Jan Paschal)