Bank of Cyprus to raise EUR345 mln

Bank of Cyprus (BOCY) said it would proceed with a 2-for-7 rights issue at 2 euros a share to raise 345 million euros and boost its equity capital.
The cash call, which will be completed by October, will strengthen the lender’s capital adequacy ratio by 1.3 percentage points. The bank’s Tier 1 ratio stood at 8.4 percent at the end of March, it said.

“Given the bank’s current strong fundamentals … this capital increase is not reflective of any deterioration in the Bank’s business, nor is it related to the outcome of any stress tests,” Bank of Cyprus said in a statement.

Bank of Cyprus and another Cypriot lender, Marfin Laiki are among 91 European banks from across Europe which would be stress-tested to assess the resilience of the EU banking sector. Results of the stress tests will be disclosed later this month.

The Cypriot bank said a capital increase would allow the bank to deploy increasing liquidity to seize profitable growth opportunities. Bank of Cyprus has been expanding in eastern Europe and particularly Russia in recent years.

Bank of Cyprus said it maintained its profit target for 2010 of after-tax profit of between 300 and 400 million euros. “The Bank is currently tracking towards a strong financial performance for the first six months of 2010 supported by continued positive deposit inflows and a notable recovery in credit demand,” it said.

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