Bank of Cyprus, for the time being, is not negotiating the sale of its share of Uniastrum Bank

Bank of Cyprus, the largest Cyprus bank, for the time being, is not engaged in any negotiations on the sale of its 80%-share of the Russian Uniastrum Bank, according to Gagik Zakarian, President and co-owner of the Russian subsidiary of the Cyprus bank. He does not expect attachment by the Russian courts of the shares of Uniastrum belonging to the majority shareholder under the claims by aggrieved depositors of Bank of Cyprus.

When G.Zakarian was interviewed by Prime last March, he voiced a supposition that the majority owner of Uniastrum might wish to sell his 80%-share. Later, the media informed that the stock could be sold within one week, citing sources.

G.Zakarian said: “No such negotiations are being held. These are rumors”.

Last March, Cyprus consented to the reorganization of its banking system in exchange for 10-billion-euro loans from the EU and the IMF. The reorg of the banks involves losses of 40-80% and more for uninsured (over 100 thousand euros) deposits in the two largest island banks - Cyprus Popular Bank (Laiki) and Bank of Cyprus. The aggrieved Russian depositors have already begun filing suits against Cyprus banks and their Russian subsidiaries with Russian courts. The share of the Russian Rosprombank owned by Popular Bank (Laiki) has already been attached under one of such claims.

G.Zakarian denies the existence of any similar claims towards Uniastrum Bank and their possible legal consequences: “I see no legal motives for the attachment of the shares. Second, I see no legal reason to exact the shares in the favor of the depositor, who executed an agreement with Laiki or Bank of Cyprus on the basis of the Cyprus law. What does a judgment by any Russian court have to do with that?.. How can an asset be exacted if all relations were established under a different law? On what will the Russian court base its judgment?”

In his opinion, the imposition of an attachment is also hindered by the fact that Bank of Cyprus does not own Uniastrum Bank directly but rather through a Cyprus company. But should the shares be exacted in favor of the aggrieved depositors, even in this case Russian subsidiaries of the Cyprus banks will be able to keep on operating, or so the head of Uniastrum Bank believes. <…>

Advocate Artem Kukin, Partner of the Law Firm "YUST", is convinced that proving the Russian courts’ jurisdiction over those disputes will be one of the main problems. He points out that if the court accepts the reasons of the party claiming the existence of such jurisdiction, the attachment of the shares of the Russian subsidiaries of Cyprus banks appears entirely plausible.

A.Kukin said to PRIME: “According to a general rule, the relationship between Cyprus banks and Russian companies, which have deposited funds in those banks, is governed by the law the Republic of Cyprus. And the extent to which a Russian court may be able to apply Cyprus law is very much questionable. Therefore, it appears more promising to file the respective claims with the Cyprus courts. However, if the companies’ main objective is to attach the Russian assets of the Cyprus banks, the initiation of judicial proceedings in Russia certainly looks like a sensible idea”.

But he believes that only shares may be attached. The advocate explains: “The assets belonging to the subsidiaries themselves can hardly be attached, for those belong to legal entities other than the Cyprus banks”.

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