The Romanian subsidiary of Bank of Cyprus will be kept closed until Thursday (April 25 ) for technical procedures, but its deposits will pass under the Romanian law, and they will be guaranteed by the Guaranteeing Fund for Deposits in Romania, according to Adrian Vasilescu, counselor of the Romanian Central Bank Governor Mugur Isarescu. Romania guarantees all deposits under the EUR 100,000 threshold per deponent.

Bank of Cyprus branches in the country originally closed on April 1, as the bank tried to find a buyer for its Romanian subsidiary. Since that date, the closure period has been extended, with the most recent deadline for re-opening passed on April 23.

The Cyprus Central Bank previously rejected offers - reportedly worth less than EUR 100 million - submitted by Romanian lenders Banca Transilvania and Raiffeisen Bank Romania for the takeover of the Romanian subsidiary of Bank of Cyprus. The Cypriot central bank then continued to look for alternatives to transfer the deposits of the Bank of Cyprus’ Romanian subsidiary, which are governed by Cypriot law.

Deposits in Romania are currently under EUR 100 million, according to Mediafax, quoting sources on the local market. The two offers submitted by Banca Transilvania and Raiffeisen Bank Romania were deemed too low in comparison to the target value for Bank of Cyprus Romania assigned by the committee in charge of restructuring the banking system in Cyprus.

Bank of Cyprus’ assets for its Romanian subsidiary are around EUR 450 million, out of which EUR 350 million are loans. One of the largest loans granted in Romania is the EUR 100 million lent to the company which owns the JW Marriott building, which is due for repayment in 2017. Real estate financing makes up over half of the remaining loans on the balance sheet.

Bank of Cyprus only holds 0.7 percent of the banking assets in Romania. As it is a subsidiary of a European Union bank, deposits are guaranteed via the guarantee scheme in its home country, Cyprus. Romania’s Central Bank Governor Mugur Isarescu last week said the two Cypriot banks in Romania only have 1.3 percent of the banking assets in the country.

The move to sell Bank of Cyprus Romania was demanded in the wake of the banking crisis in Cyprus, after which an agreement with the EU, the European Central Bank (ECB) and the International Monetary Fund (IMF) on the terms of a bailout for the country was eventually reached.

editor@romania-insider.com