This announcement is a notice given by Cyprus Popular Bank Public Co Ltd (hereinafter “the Bank”), to holders of Convertible Enhanced Capital Securities of the Bank (hereinafter ”CECS”), in accordance with term 5.4 of the terms of issue as presented in section 5.3 of the Prospectus of the Bank dated 19 May 2011 (hereinafter “Terms”).

 

Following the assessment of the Terms by the European Banking Authority (EBA) and following instructions of the Central Bank of Cyprus, the Bank in accordance with the provisions of term 5.3.7(d) of the Terms, proceeds with the following amendments of the Terms of CECS, so that the CECS will be eligible capital instruments for meeting the buffers for the capital exercise that was carried out in December 2011 by the European Banking Authority (EBA):

 

Modifications of the Terms 

 

As of 01 June 2012 the Terms will be modified as follows:

 

(i)    Term 5.3.5(a) - Interest Payment Cancellation at the Discretion of the Bank

 

(a)   First paragraph:

 

With the deletion of the phrase ”taking into account its specific financial and solvency condition“ as well as the deletion of the phrase “subject to the restrictions described in term (c) below Dividend and Capital Restrictions, should it ascertain that it does not fulfil the relevant capital adequacy requirements, as defined by the Central Bank of Cyprus and/or the said Interest Payment will result in its non-conformity with the aforementioned capital adequacy requirements and/or will adversely affect its solvency and/or its financial position for the foreseeable future .”

 

With the above modifications, term 5.3.5(a) will read as follows:

 

“(a) Interest Payment Cancellation at the Discretion of the Bank

 

The Bank may, prior to any Interest Payment Date, at its sole discretion and at all times, elect to cancel an Interest Payment on a non-cumulative basis, for an unlimited time period”. 

 

(ii)     Term 5.3.5(b) - Mandatory Interest Payment Cancellation

 

(a)    Subparagraph (iii) of first paragraph:

With the deletion of the phrase “on the basis of the assessment of the financial and solvency situation of the Bank for the next three years.”

 

(b)   Second paragraph

With the deletion of the phrase “provided that it satisfies the conditions of solvency and on the basis of its financial condition”

 

(c)    Fifth paragraph

With the deletion of this paragraph in its entirety

 

With the above modifications, term 5.3.5(b) will read as follows:

 

“(b)  Mandatory Interest Payment Cancellation

 

The Bank will not proceed with the payment of any interest payable on any Interest Payment Date and will proceed to a Mandatory Interest Payment Cancellation, if:

 

(i)     prior to the date of any Interest Payment, the Bank does not satisfy the minimum solvency requirements as defined by the Central Bank of Cyprus or if the Interest Payment will result in the Bank no longer satisfying the minimum solvency requirements; or

 

(ii)     prior to any Interest Payment Date, the Bank has insufficient distributable Items for such Interest Payment. Distributable items on any Interest Payment Date means, the net profit of the Bank's Group for the financial year ending immediately prior to the relevant Interest Payment Date, together with any net profits and retained earnings carried forward from any previous financial years and any net transfers from any reserve accounts in each case available for the payment of distributions to ordinary shareholders of the Bank; or

 

(iii)      the Central Bank of Cyprus, at its sole discretion, requires the cancellation of Interest Payments.

 

The Bank may pay Interest at a subsequent Interest Payment Date, without the obligation to pay any previous Cancelled Interest Payment.

 

Any Cancelled Interest Payment under conditions (a) and (b) above will be fully and irrevocably cancelled and forfeited and will no longer be payable by the Bank. An Interest Payment Cancellation does not constitute an event of default and does not entitle Holders of Convertible Enhanced Capital Securities to petition for the liquidation or dissolution of the Bank.

 

An Interest Payment may be cancelled and not paid provided that the Bank gives notice to the Trustee and the Holders at least ten (10) Business days prior to the relevant Interest Payment Date. Interest Payments may be cancelled on a non-cumulative basis for an unlimited time period.

 

Both in the event a Holder elects to exercise his/her Conversion Right (at any Conversion Period including the Special Conversion Period), as well as in the event of Mandatory Conversion, the interest payable shall cease to be calculated and payable as from the previous Interest Payment Date.”

(iii)   Term 5.3.5(c) – Dividend and Capital Restrictions

With the deletion of this term in its entirety.

(iv)   Term 5.3.7(d)- Legal and Regulatory Changes

 

FirstParagraph

With the deletion in the first line of the word “of” before the words “the Republic of Cyprus” and the replacement with the addition of the words “applicable in”.

 

With the abovementioned modification the relevant part of the first paragraph of term 5.3.7 (d) will read as follows:

 

“If, in the opinion of the Bank, any change or proposed change of the legislation or relevant regulations applicable in the Republic of Cyprus[ ......]”

 

It is noted that the “Information on the Convertible Enhanced Capital Securities Issue” as contained in the Summary Note of section 1.15 of the Terms, the “Key Terms of Perpetual Convertible Enhanced Capital Securities Issue” as contained in section 5.2 of the Terms, as well as the “Risks Related to Convertible Enhanced Capital Securities” as described in section 2.1 of the Terms, should from now on be read and interpreted in conjunction with the abovementioned modifications which amend certain references within them.

 

It is noted that the Bank, pursuant to term 5.3.7(d) of the Terms, has appointed Deloitte Ltd as an independent financial adviser to assess the above modifications to the Terms, in accordance with the instructions of the Central Bank of Cyprus described hereinabove with the purpose of confirming to the Trustee in writing whether the said modifications to the Terms would not result in terms that are materially less favourable to an investor than the original Terms.

 

Based on the above, Deloitte Ltd, as per its report dated 30 May 2012 prepared solely for the use of the Trustee, who was appointed by a Trust Deed dated 9^th May 2011 as a Trustee of the CECS, states that the modifications of the Terms are in accordance with the relevant instructions of the Central Bank of Cyprus and would not result in terms that are materially less favourable to an investor holder of CECS than the original Terms. The report together with the respective notice for the modification of the Terms as described above, have been given to the Trustee pursuant to the provisions of term 5.3.7(d) of the Terms.