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Development bank close to agreement with Russian investors

June 2, 2014

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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Source: Cyprus Mail

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