WHILE THE CURRENT SHAREHOLDERS HAVE A PARTICIPATION LIMIT Bank of Cyprus has begun "showing off its assets" to foreign investors

Last week, Bank of Cyprus started its road-show for promoting itself among foreign investors, in an attempt to raise 1 billion Euros, through a capital increase, the Cypriot press reports.

The action began less than seven days after the management of the bank decided, under the pressure of the authorities, that the current shareholders, (many of them being depositors whose savings were confiscated and used to bail-out the bank) would not be allowed to subscribe more than 20% in the capital increase.

Bank of Cyprus (BoC) has designated HSBC, Credit Suisse, VTB and Deutsche Bank to contact potential investors, on its behalf, according to Cyprus Mail.

The road-show has begun last Tuesday, in London, and according to the same source, it consists of presentations held by the executives of BoC before small groups of potential investors.

This week, the roadshow is set to move to the United States. Bank of Cyprus does not rule out the inclusion of other financial centers in its promotion.

On Friday the placing of orders is scheduled to begin, by new investors as well as by the existing shareholders, a process which should determine the price of the bidding offer and is expected to end on July 25th.

In the beginning of next month, the current shareholders would be give the possibility to bid for the 20% stake that has been set aside for them.

According to Stockwatch, quoted by Cyprus Mail, the shareholders of Bank of Cyprus that have holdings smaller than 100,000 Euros would not be allowed to participate in the share capital increase, in order to avoid having to prepare and send out information mailings, which would be a time consuming process.

In the stead of that bulletin, the management of BoC only issued an informative memo, intended for institutional investors, including hedge funds, the quoted source mentions.

Cyprus Mail writes that approximately 80% of the capital of Bank of Cyprus is in the hands of 21,000 people whose deposits were taxed almost 50% in summer last year, as part of the process for the recapitalization of the bank.

The aforementioned shareholders stand to lose one quarter of their holdings, the publication notes.

Cypriot press writes that small shareholders may be allowed to participate in the capital increase, in the end, due to the vocal reactions to the decision of BoC.

George Mountis, executive of the Business Development department of the Cypriot investment manager Emergo Wealth predicts that the increase of the capital of Bank of Cyprus would reduce the book value of the bank's shares from 52 cents per share to 45 cents per share.

"Considering that only a small part of the non-performing loans have provisions set up for them and that their levels continue to increase, the true value of capital of the equity will be more likely closer to 3 billion Euros, after the capital increase, which would translate into a book value of 38 cents per share", he says. He added that because the price of shares of banks that are in a delicate situation is 30 - 50% below the book value, the shares of Bank of Cyprus should trade in the 11.4 and 19 cents range, if it were to be listed again on the stock exchanges of Cyprus and Greece.