The Bank of Cyprus announced that it has been notified by the Ministry of Finance that on 16 December 2015 the Government will fully repay a bond held by the Bank of an amount of €340 mn.
According to the announcement, the bond to be repaid was issued on 1 July 2015 to replace the outstanding amount of the recapitalisation bond of Laiki Bank that was transferred to the Bank in March 2013, following the acquisition of certain assets and liabilities of Laiki Bank.
The bond is pledged as collateral with the European Central Bank (ECB). The proceeds will be used to repay €140 mn of ECB funding and €200 mn of ELA. As the recapitalisation bond of Laiki Bank was transferred to the Bank at fair value at the acquisition date, there will be an accounting profit of approximately €13 mn resulting from this transaction.
According to the bank, the above repayment of the bond by the Republic of Cyprus, coupled with customer inflows experienced during the fourth quarter of 2015 and proceeds from ECB funding relating to the covered bond becoming ECB eligible, will result in total ELA repayments of €1.1 bn post 30 September 2015, reducing ELA to €3.8 bn.