The Bank of Cyprus yesterday said it had clinched a deal to buy 80% in Russia’s Uniastrum Bank for $576m as part of its strategy to expand abroad.

"It is a historic day for the Bank of Cyprus. The acquisition of Uniastrum Bank in Russia seals the implementation of the strategy we had presented in our three-year plan," the bank’s CEO, Andreas Eliades, told reporters.

"Uniastrum Bank, which has the 9th largest banking network in the country, will significantly strengthen our footprint in our targeted markets," he added.

The acquisition will be financed by Bank of Cyprus’ existing resources and won’t affect the bank’s Tier 1 capital ratio, which is expected to remain above 7.5% on completion, according to Eliades.

Bank of Cyprus Chairman Theodoros Aristodemou said: "This acquisition, apart from the benefits that it will bring to our organisation and our shareholders, will bring closer the Greek and the Russian worlds."

Moscow-based Uniastrum is ranked the 15th biggest mortgage lender and had total assets of έ1.4b at the end of 2007, according to a press release.

Founded in 1994 with a strong presence in Moscow and in another 41 regions of Russia, it now has a total of 222 branches and sub offices, the majority of which have been opened over the last few years. The Bank employs some 4,300 people.

Retail

The two founding shareholders of Uniastrum, George Piskov and Gagik Zakarian, will retain a 10% interest each and remain as chairman and president, respectively.

The transaction, expected to be completed at the end of the year following approval by the regulatory authorities in Cyprus and Russia, aims to capture the Russian retail banking potential, according to the press release.

"Russia has a buoyant economy with an average real GDP growth of 7.3% since 2004, and retail loans and corporate loans increasing annually by 80% and 56%, respectively.

The banking sector is significantly under-penetrated, especially in the retail and mortgage sectors," it added.

With the addition of Uniastrum Bank to the Group, Bank of Cyprus will operate a network of 520 branches in Cyprus, Greece, Russia, Romania, Ukraine, the United Kingdom and Australia.

By Annie Charalambous , The Cyprus Weekly, 30 June 2008