Bank of Cyprus said on Tuesday that it has signed a binding agreement to sell its wholly owned subsidiary bank in the UK, Bank of Cyprus UK Limited and its subsidiary Bank of Cyprus Financial Services Ltd to Cynergy Capital Limited for £103 m, some €117 m.
The sale is expected to be completed by the end of 2018 and is subject to approval by the regulators of both the Group and BOC UK.
BoC said the decision was in line with the Group’s strategy of delivering value for shareholders and focusing principally on supporting the growing Cypriot economy.
Following completion, BOC UK is expected to be rebranded to “Cynergy Bank”, a name chosen to reflect the bank’s Cypriot heritage, combined with a modern and energetic focus.
BoC said the sale consideration of £103 m (c. €117 m) is subject to customary purchase price adjustments for the period up to completion. The consideration is payable in cash, of which half is deferred over 24 months from completion, without any performance conditions attached.
Further to this transaction, the Group and BOC UK will sign a cooperation agreement, which will see both organisations cooperating in a number of key areas going forward, including continuity of servicing for existing customers.
John Patrick Hourican, Group Chief Executive Officer, commented: “This is another positive step in our journey back to strength. The transaction will further simplify the Group and deliver good value to shareholders. The equity realised will be deployed in pursuit of our core activity in Cyprus to continue to support the recovery of the Cypriot economy.
“Whilst BOC UK has been part of the Group for a long time, it has become increasingly clear that the UK business will benefit from the greater scale that can be achieved through the support of Cynergy. We expect this change in ownership to drive greater value for customers, colleagues and Group shareholders. The transaction will allow the bank in the UK to grow faster, thereby achieving the ambition for this business with new partners. We are excited about the cooperation agreement which provides for a strong channel of connectivity post-Brexit and into the future, and will support Group customer requirements for UK banking, as well as delivering commercial benefits for both organisations.”
Nick Fahy, Chief Executive Officer of BOC UK, commented: “This is a positive development for the UK bank. The sale to Cynergy will enable us to focus on growing our franchise across enterprising business owners and savers in the UK, including the underserved property and SME market. We have worked for decades with UK-Cypriot customers and businesses and are immensely proud of our history – we will continue to stay true to this heritage. I look forward to working with Cynergy and further developing Cynergy Bank into one of the leading specialist banks in the UK.”
Bal Sohal, Director of Cynergy added: “We have been actively looking to invest in the UK banking sector, where we see significant opportunities for growth and to better address the needs of small businesses in the UK, including those of the Cypriot community. Cynergy’s focus will be on delivering sustainable growth for the UK bank. We plan to support the existing management team to deliver on the strategy it has for the bank and are committed to investing further capital to develop the business in the coming years.”