BANK OF CYPRUS ROMÂNIA, CLOSED DOWN TO BE SOLD Adrian Vasilescu: "A good buyer will be found"

Cyprus' Central Bank yesterday decided to suspend for a week, of the operations of the Romanian branch of Bank of Cyprus (BoC), starting yesterday. The reason behind this decision would be to allow finding a solution for selling the Romanian subsidiary of the biggest Cypriot bank, the press release states, which specifies that the Romanian National Bank has received a notification about that.

Bank of Cyprus has entered the resolution procedure, which involves the restructuring and reorganization of the lender, the announcement mentions. "Until the reopening of the branch and of its Romanian agencies, customers can use the ATM networks, and for special needs they are invited to contact the call-center of Bank of Cyprus".

The sale of the Romanian branch of the Cypriot bank will bring the deposits created with this bank under the incidence of the Romanian legislation, Adrian Vasilescu, the advisor to the governor of the NBR: "The measure was taken this morning (ed. note: yesterday morning), but it has been negotiated ever since last week. We weren't taken by surprise. Their decision is a decision accepted by the NBR (...) The good relations and the negotiation capabilities have intervened and it has come to this decision to suspend the operations in order to identify a buyer, a measure which in the eyes of the NBR will provide protection for depositors, meaning that the acquiring bank would take over the assets and the liabilities, and the deposits will pass under the jurisdiction of the Romanian law". Adrian Vasilescu explained that according to current legislation, Bank of Cyprus, being set up in Cyprus, and being authorized and overseen by the Central Bank of Cyprus, obeys any regulation issued by the institution in that country.

"We will find out in the coming days whether there is interest or not. I think that there is and a good buyer will be found", Vasilescu continued.

The advisor to the governor of the NBR said that, even though there is a high likelihood of a takeover being achieved in just one week, there is also a chance of the operation taking longer. "I think it will be solved this week", Adrian Vasilescu concluded.

Nicolae Cinteză, the head of the oversight division of the NBR, said last week that if Marfin Bank România, the local subsidiary of Cyprus Popular Bank, were included among the assets which Bank of Cyprus wants to keep, it may take over the operations of the Romanian branch of Bank of Cyprus. He is also considering the possibility of Marfin România being sold.

• The bank's customers, affected by the suspension of the operation

The suspension of the operations is affecting the customers which have accounts open with the lender. The heaviest impact will be felt by the companies that work with Bank of Cyprus exclusively, economic analyst Aurelian Dochia said. He thinks, however, that the number of these customers is low, as most of them work with at least two banks. Besides, one of the clients of Bank of Cyprus, who had been called to the agency where he was conducting his current operations, in order to meet with their management, said that this is not the only bank he works with.

The impact of the decision of Bank of Cyprus is low, considering that it has less than 1% of the bank assets in Romania.

Last week, Cyprus concluded a financial assistance agreement with the international financial institutions, which would result in the restructuring of Bank of Cyprus, and Cyprus Popular Bank (Laiki Bank), the second bank in the system in terms of size, will be split. The "good" faction will be absorbed by Bank of Cyprus, and the "bad" will be shut down.

Laiki Bank is present in Romania through Marfin Bank România, which has a Romanian legal personality, is regulated by the NBR and holds 0.6% of the bank assets in Romania. The Romanian branch of Bank of Cyprus controls 0.7% of the total assets of the Romanian banking system. Banks recorded in Romania, report to the NBR and participate in the Fund for the Guarantee of Bank Deposits (FGDB), which will pay, for every secured depositor of a lender, a maximum of 100,000 Euros, if the institution in question defaults. The beneficiaries of the support scheme are individuals, microenterprises and small and medium enterprises (SMEs). Deposits of the managers of the participating banks, directors, members of the supervisory boards, significant shareholders and of their auditors and of companies which are part of the same group as the banks in question, as well as those of the spouses, relatives and first degree relatives by affinity.

The branches of foreign banks present in Romania do not send to the NBR information concerning solvency, their own funds and the classification of deposits. The deposits opened in these institutions are guaranteed by the similar support schemes in their parent countries. Bank of Cyprus, including its Romanian subsidiary, is a part of the mechanism for the guarantee of deposits in Cyprus, which is similar to the one in Romania.