RCB Bank Ltd on Tuesday announced that it has entered into an agreement with Hellenic Bank Public Company Ltd for the sale of a performing loan portfolio of up to €556 million.
The loan portfolio is related funds on the accounts of the corresponding borrowers and related off-balance sheet obligations, it added.
The loan portfolio being sold comprises of two tranches – Tranche A of €292 million relating to Cypriot exposures and Tranche B of €264 million relating to Cypriot, other European and United Kingdom exposures.
The sale of Tranche A is expected to be completed on Thursday, while the sale of Tranche B is expected to be completed by May 31, subject to all relevant regulatory approvals.
The loan portfolio is well collateralized and comprises of mainly corporate loans. About 75% of the loans are Cypriot exposures, while the remaining c.25% are commercial real estate loans in the European Union and the United Kingdom.
The portfolio includes exposures to Cypriot and other European borrowers in the following main sectors: hotels and accommodation, commercial real estate, construction and development, wholesale and retail trade, manufacturing, food and beverage, renewable energy and education.
The sale of the loan portfolio shall strengthen further the capital and the liquidity buffers of RCB Bank Ltd and shall create additional substantial buffers, thus allowing for significant absorption capacity of any potential external shocks.
The total capital adequacy ratio of RCB Bank Ltd shall increase from 21% to over 27%.
The Bank’s liquidity shall exceed the total amount of all liabilities, which enables RCB Bank Ltd both meeting its obligations towards all of its clients in full as well as to maintain sufficient levels of liquid assets for its further operations.
RCB Bank is expected to receive a total amount of over 500 million Euros from the sale.