Bank
of Cyprus (BOCY.CSE) announced on Thursday it had
clinched a deal to buy 80 percent in
Russia
's Uniastrum Bank for $576 million as part of its
strategy to expand abroad.
The
bank said it expected the acquisition to be concluded
in the fourth quarter of 2008, after regulatory
approval.
"This
is the most important step Bank of Cyprus has taken
since deciding to expand into
Greece
in 1991," Bank of
Cyprus
Chief Executive Andreas Eliades told reporters.
"The
acquisition of Uniastrum seals the implementation of
our strategy as outlined in our 3-year business
plan," he said.
The
consideration represents an attractive acquisition
multiple of 3.1x P/BV taking into account a capital
increase of US$50mn to be completed at closing. The
transaction will be financed from Bank of Cyprus’
existing capital resources and the pro forma Tier 1
capital ratio is expected to remain above 7.5% after
completion. The transaction is expected to be earnings
accretive from the first full year of investment
(2009) and achieve a return on investment in excess of
10% within two years (2010).
The
acquisition is expected to increase profit from the
first year of investment in 2009, and provide a 10
percent return on investment in 2010.
Uniastrum
was created in 1994 and is the ninth largest in
Russia
in terms of branch network. Uniastrum will continue to
operate independently of the existing Bank of Cyprus
network in
Russia
, which started full banking operations in 2007.
Financial
Mirror, 26 June 2008
