NEGOTIATIONS between the Cyprus Development Bank's (CDB) shareholders and a Russian group for the acquisition of a 50 per cent equity stake in the lender are almost complete, with the Russian funds already placed in an escrow account. The bank, rumoured to have been facing hardship as a result of the adverse economic environment, slashed payroll costs last year through a voluntary exit scheme, and had gone public with investor interest from "various groups", which has since materialised into negotiations with the Russian buyers. "Negotiations are in their final stage," a source told the Cyprus Mail. "The new structure will include an approximately 50 per cent stake by the Russian group." It is understood that, as a result of the new investors' entry, existing shareholders' stakes in the bank will be diluted accordingly. Reports of talks between CDB's shareholders and a Russian group were confirmed as early as last November, culminating in positive developments that are likely to see a deal finalised soon. Such investment may prove indicative of foreign investors' confidence in Cypriot businesses – banks in particular – considered key in the recovery of Cyprus' flailing economy. But the move may attract special significance in light of the Bank of Cyprus' rumoured preparations for raising capital in a similar manner. CDB was established in 1963 as a state-owned company to promote economic development and was granted a commercial banking licence in 2001, and was privatised in 2008 for €75 million. The new owners included such well-known names of the Cypriot economy as Constantinos Shacolas, Leonidas Ioannou, and the Leventis family.
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