| NICOSIA, March 24
NICOSIA, March 24 Bank of Cyprus's 225
million euro sale of its Ukrainian bank is on track to happen
within weeks, Chief Executive John Hourican said in an interview
The bank announced on January 31 that its Ukrainian
operations would be sold to Russia's Alfa Group. Since then
tensions have flared between Ukraine and Russia over Moscow's
seizure of Crimea.
"We're still expecting, and I'm touching wood, the Ukrainian
deal to complete in the coming weeks on the terms that we
agreed," said Hourican, who was formerly head of Royal Bank of
Scotland's investment bank.
"We're in regular contact, we are going through the
mechanics of completion and those mechanics of completion are
suggesting that the other party is serious about completing with
Hourican added that U.S. sanctions against Russia had not
affected Bank of Cyprus's customers or operations, but the
rescued bank does not see itself as a long-term owner of
significant Russian assets.
Bank of Cyprus counts six Russians on its 15-person board of
directors after it dramatically converted large deposits, many
of them held by Russians, into equity to save itself from
collapse a year ago.
"So far, the sanctions have not impacted the companies or
businesses who do business with us in Cyprus," Hourican told
Reuters, referring to Russians who take advantage of tax
treaties and other legal structures that give them incentives to
put money through Cyprus.
"Of course we're keeping a very careful watching brief to
ensure that we understand that business," said the Irishman,
who was appointed chief executive in October.
Cyprus and Russia have close financial links going back
decades, with Russians using the Mediterranean island as a safe
haven for their money since the Soviet Union collapsed in 1991.
Bank of Cyprus's largest international subsidiary,
Uniastrum, is based in Russia with 1.5 billion euros ($2.07
billion) in assets and a staff of 2,500, against the group's
total assets of 30.4 billion euros at the end of 2013.
Even before the current standoff between Russia and the West
over Moscow's annexation of the Ukrainian peninsula of Crimea,
Bank of Cyprus had been considering selling its Russian business
as part of a general retrenchment to shore up its balance sheet.
Hourican, who will travel to Russia on Tuesday for a
scheduled Bank of Cyprus board meeting, said the bank's Russian
unit was self-contained, with two-thirds of its funding coming
from local deposits and the remainder funded by its parent.
"We are building the value in that business with a view to
determining in the future whether this bank should be the right
owner of that business," he said. "My bias is that we should not
be the right economic owner of that business (over the long
term), but that for the coming years we should be."
($1 = 0.7256 euros)
(Reporting By Laura Noonan; Editing by Stephen Powell)