Bank of Cyprus completes €1bn placement

Nicosia - Bank of Cyprus, the island's largest lender, has completed a €1bn ($1.34bn) capital increase in a private placement to help it restructure following a haircut on deposits last year.

BoC announced late Monday the successful placement of 4.2bn new ordinary shares at a price per share of €24 cents.

"Shares were allocated to a broad range of institutional investors from Europe, North America and Russia, including a number of international investors introduced by WL Ross & Co LLC and the European Bank for Reconstruction and Development," BoC said.

Existing shareholders will be able to acquire up to 20 percent of the shares offered in the private placement scheme, with the initial allocation adjusted in line with their subscriptions.

The increase will take the bank's core Tier 1 capital to 15.1% from its present level of 10.6%.

BoC said the capital injection will help it restructure more quickly, withstand upcoming EU bank stress tests and help stimulate a recovery of the recession-hit Cyprus economy.

"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 BoC CEO John Hourican

He said it was the biggest single foreign investment in Cyprus.

American billionaire investor Wilbur L Ross said in a statement: "We are pleased to assist with the introduction of international investors who are committed to buying about 40% of this placement."

"This country had been thriving prior to the European financial crisis and we believe it is well on its way toward recovery," he added.

Cyprus agreed in March 2013 to a €10bn rescue package with the European Commission, European Central Bank and International Monetary Fund to bail out its troubled economy and oversized banking system.

The deal included the closure of the island's second-largest bank, Laiki, and a 47.5% "haircut" on deposits above €100 000 at BoC.

Many of those large BoC depositors were Russian and in return they got shares in the lender, with six Russians now represented on the 15-member board.