Securities offered

Non-cumulative perpetual enhanced capital securities (Enhanced Capital Securities)

Issue price / Nominal value

At par / €1,000 per Enhanced Capital Security 

Use of proceeds

The further enhancement of the Bank's capital base by replacing the already issued 2008, 2009, 2010 Capital Securities with Tier 1 Capital which is Basel III compliant.

Ratio and size of issue

• One (1) Enhanced Capital Security of nominal value of €1,000 for each one (1) 2008, 2009 and 2010 Capital Security of the same nominal value
• Total issue amount  €737,753,000

This offer is addressed to the holders of 2008, 2009 and 2010 Capital Securities to replace at their discretion their Capital Securities with the Enhanced Capital Securities

Duration

Perpetual, without maturity.

Interest rate and interest payment

• The Enhanced Capital Securities will bear an annual fixed interest rate of 7.50%
• The interest will be calculated based on a 360-day year and will be paid quarterly, after the deduction of the relevant contributions or/and taxes according to the applicable laws

Call Option

The Bank may, on its own initiative, elect to redeem all, but not some, of the Enhanced Capital Securities, at their principal amount together with accrued interest, 5 years after the issue date or on any other Interest Payment Date thereafter, subject to the prior approval of the Central Bank of Cyprus.

Subordination

The Enhanced Capital Securities constitute direct, unsecured and subordinated securities / obligations of the Bank and rank pari passu to the claims of other issues of capital securities classified as Tier 1 Capital, without any preference among themselves.

Optional Interest Payment Cancellation

Should, prior to any interest payment date, the Bank, at its absolute discretion, determine that it is not/ will not be in compliance with the relevant capital adequacy / solvency requirements, then the Bank may elect to cancel such interest payment. Interest payments can be cancelled indefinitely without any accumulation of interest. Any interest not paid is no longer due and payable by the Bank. Interest cancellation does not constitute an event of default of interest payment and does not entitle holders to petition for the liquidation or winding-up of the Bank.

Mandatory Interest Payment Cancellation

If prior to any interest payment date there is a breach of applicable minimum solvency requirements, or insufficient distributable items, the Bank will be required to cancel interest payments on the Enhanced Capital Securities. The Central Bank of Cyprus may require, at its sole discretion, on the basis of the assessment of the financial and solvency situation of the Bank for the next three years, that the Bank should cancel interest payments on the Enhanced Capital Securities.

Mandatory conversion of Enhanced Capital Securities into ordinary shares of the Bank

If a Contingency Event or Viability Event (described below) occurs, the Enhanced Capital Securities shall be mandatorily converted into ordinary shares at the Mandatory Conversion Price (defined below).

Contingency Event: Contingency Event means the Bank has given notice that either

(i)    prior to the Basel III Regulation Date, as will be adopted by the European Union, its Core Tier 1 Ratio is below 5% or, on or after the Basel III Regulation Date as will be adopted by the European Union, its Common Equity Tier 1 Ratio is below the minimum threshold as it will be determined; or

(ii)   the Central Bank of Cyprus determines that the Bank is non-compliant with any required regulatory capital adequacy ratio thresholds specified in the applicable banking regulations.

Viability Event: occurs if:

• the Central Bank of Cyprus determines that the conversion of the Enhanced Capital Securities, together with other securities that, pursuant to their terms, are capable of being converted into equity, is required to improve the capital adequacy and financial position of the Bank to prevent insolvency and/or
• if the Central Bank of Cyprus determines that the Bank requires public sector support to prevent it from becoming (i) insolvent or (ii) bankrupt or (iii) unable to pay a material amount of its debts or
•  other similar circumstances

Mandatory Conversion Price: The Mandatory Conversion price will be calculated as 80% of the weighted average price of the Bank's share, for a period of 20 Business Days prior to the Contingency Event or Viability Event notice. The minimum Conversion Price is the nominal value per ordinary share (currently €0.85) or any lower price which will have been proposed by the Board of Directors for a share capital increase of the Bank, provided that this is in compliance with legislation in force.

Dividend and capital restrictions

If an Interest Payment is cancelled, then the Bank shall not declare or pay any distribution or dividend, or make any other payment on the ordinary share capital or any Tier 1 Capital.

Listing on CSE

The Bank intends to proceed with the required actions to list the Enhanced Capital Securities on the Cyprus Stock Exchange (‘CSE')