CEO Zimarin now owner of 49.9% of RCB after Otkritie walks out (Update-1)

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(Updates with comment and background in third paragraph)

By Stelios Orphanides

Bank Otkritie Financial Corporation sold its 19.85 per cent stake in RCB Bank on Wednesday to the “management of the bank”, the Limassol-based lender said, with the chief executive now in control of nearly half of the capital.

“The board of directors of RCB Bank notes that the change in the shareholding structure reflects the strategic objectives of the bank to continue its successful business development with the focus on Cypriot and European markets,” RCB said in a statement on its website.

“In accordance with the bank’s strategy for the next three years, RCB will continue developing and providing its clients with high quality modern banking services on Cypriot and European markets,” a source close the bank said. The management bought shares of a stable, dynamic and profitable Cypriot bank and the lender “actively develops operations in Cyprus” expanding its branch network after having increased its client base by one third.

Following the transaction, the shareholding of Crendaro Investment, which previously held almost a third of the bank’s stock, rose to 5,389,933 shares or 49.9 per cent, according to the bank’s website. Russia’s state-owned VTB Bank is the owner of 5m shares, or 46.3 per cent of the shareholding and Mitarva Ltd holds 411,536 ordinary shares, or 3.81 per cent of the equity.

The bank’s management paid slightly more than $100m (€84.7m) to acquire Otkritie’s stake, the source said.

The Central Bank of Cyprus, which jointly supervises RCB and three other Cypriot lenders with the European Central Bank, was not immediately available for comment.

Kiril Zimarin, RCB’s chief executive officer, “is the ultimate beneficiary of Crendaro,” the source said. “Other members from the bank’s top management are the ultimate beneficiaries of Mitarva”.

The Financial Times reported on Thursday that a “significant depositor run” compelled Otkritie to sell its RCB stake, acquired three years ago. Otkritie sold its RCB stake for a profit after receiving €41.5m in dividend last year alone which was twice as much as the bank’s 2016 net earnings, Financial Times reported without citing a source.

According to RCB’s 2016 annual report, the lender which generated a net profit of €81.7m last year against a net profit of €144.9m the year before, paid out a total of €210.2m in dividend to its shareholders.

Last year, its loans and advancements to customers dropped to €7.2bn from €11.3bn the year before, according to the document. Its customer deposits rose to below €2.8bn last year from €2.7bn in 2015, while its deposits from banks fell to €5.2bn from €9.4bn, respectively.

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About Author

Stelios Orphanides is a journalist at CyprusBusinessMail.com. To contact Stelios Orphanides: [email protected]

  • Neroli

    ‘The Only Safe Bank in Cyprus’ ‘The Bank you can Trust’ – does that come under trade descriptions?

    • Jeremy Rigg

      I wouldn’t trust them with the price of a bus ticket.

      • Neroli

        If they come under the CBC nor would I, but I have to laugh at all their large ad boards! When someone says they are safe and trust them, I stay clear!!

        • Terryw45

          If you have invested your $10 in the Cy portfolio I would change the ‘financial advisor’, but that’s only my opinion

          • Neroli

            No I don’t Bank there

    • EGB

      Isn’t it ‘The Safest Bank in Cyprus’ and isn’t it a quote (for what that’s worth)? Perhaps you have different billboards in your neck of the woods

      • Neroli

        For a bank here to say it’s the safest on its bill board, and to trust it, it’s a laugh!!

        • EGB

          Yes, but it might still be true. It’s a relative term, like the ‘safest street in Peckham’ used to be.

      • peemdubya

        Yes, all along the highway into Paphos ‘The Safest Bank in Cyprus’

        • EGB

          It’s not the greatest claim to fame but it may be true.

  • Alexander Reuterswärd

    so the bank is only valued at 420 million…not a good sign

    • EGB

      I don’t have enough money to lose any so this is an academic question. Of the 4 ‘systemic banks’ in Cyprus where does this leave it on the list?

      • Alexander Reuterswärd

        the smallest..
        interesting that they sell 20 percent for 85 million after they had a 40 million dividend payouts a year ago. high risk…

        • EGB

          So that would be 4th safest? I’m not a business person so I can’t comment on their business practices or their accounting. If they had huge reserves it is possible they could pay out dividends far beyond one year’s operating profit and given it is effectively a private company this may have been a tax avoiding prelude to this juggling of shares.

          • Alexander Reuterswärd

            the bank has a B3 rating(high risk) with Moody’s, it will be very interesting to see if that changes with new owners.

          • EGB

            So is that 4th? I looked up B3, it’s an investment rating, from what I can make out this is not really a bank you can buy shares in.

          • Alexander Reuterswärd

            exactly, you can’t buy shares, but if you could, you should consider it speculative and high risk.

            bank of Cyprus and Hellenic has caa1 (junk status ).

            normal banks such as Barclays bank is A1

          • EGB

            So not 4th then (assuming the Coop ever gets listed)? I’m not baiting you, I just want your opinion on what this this really means in terms of local banking. RCB maybe a dodgy bank for many reasons but is it any better or worse than the competition in Cyprus?

          • Alexander Reuterswärd

            4th in size 🙂
            best in rating, as long as you keep under 100.000 in each bank, you are safe (as long as the government can afford to pay the guaranteed amount ).

            personally I suggest foreign banks with better rating and not to much in the bank anyway, you usually get more by investing your money in a broad portfolio, long-term it is better.

          • EGB

            So that would be the safest bank in Cyprus. I wish I had enough money to have to worry about what to do with it :).

          • Terryw45

            Co-op, tell this is humour, unless you are on the inside!

  • JS Gost

    Three words that scare the sh1t out of me ‘Russian’, ‘Commercial’ and bank ‘Bank’ . Put in the context that they only exist in Luxembourg, Cyprus, Moscow and a postal address in the UK I feel they must be the ‘safest bank in Cyprus’. Like saying Hitler was the greatest humanitarian compared with Pol Pot, Stalin and Ki Jong-un….although some of the Cypriot banks probably languish well below them in the security rankings.

    • EGB

      So where exactly are you on this one when it comes to local banking?

      • JS Gost

        Cyprus banks are finished.

    • Vladimir

      Unlike Cypriot banks in 2013, RCB didn’t do deposits haircut.
      And in any case, it’s better for us to keep money at Russian bank rather then supporting Cypriot scammers.

  • EGB

    As it happens I started the process of opening an account with them last week and although I have barely enough money to avoid current account charges for too long let alone enough to lose if they collapse I am slightly nervous. Who exactly is behind this ‘Mitarva Ltd’ which effectively is the kingmaker? If it turns out they are the DIKO of Cypriot banking I’ll probably just stick with USB, with all of their flaws.

    • Jeremy Rigg

      I hate to see grown men cry! Keep hoping.

      • EGB

        Explain. This random comment makes no sense.

    • peemdubya

      I just read the article and was previously considering opening / operating an account with them – it will be interesting to see who exactly is behind this.