Ukrainian court arrest shares of Bank of Cyprus and Marfin Bank

The Economic Court in Kyiv in rulings of May 13 and May 24, 2013 (under cases Nos. 910/8874/13 and 910/9720/13) ordered the arrest of shares in two subsidiary banks of Cypriot banks – Bank of Cyprus (Kyiv) and Marfin Bank (Odesa), reads the state ruling register.

According to the rulings, the shares of the said banks were arrested under claims filed by Luxury Smart LLC and RVT Trans.

The banks believe that the situation will not complicate their operations in Ukraine.

"Despite the fact that Bank of Cyprus acts and will continue acting in line with the rulings until they are canceled, the rulings of the Economic Court in Kyiv do not affect the operation of Bank of Cyprus. There are no restrictions on operations with clients. The bank is operating in standard regime," Bank of Cyprus told Interfax-Ukraine on Tuesday.

The financial institution also said that in May 2013 Luxury Smart filed a claim against several defendants - Bank of Cyprus Public Company Ltd (Cyprus) and Kyiv's Bank of Cyprus.

The bank said that the dispute concerns the banking account of Pusheta Limited opened at Bank of Cyprus (Cyprus).

"In May 2013, Pusheta Limited assigned its claims to Ukraine's Luxury Smart LLC. The court issued several rulings to secure the claim, which today are being challenged by Bank of Cyprus in a court of appeals," the bank said.

The bank also said that today the results of court cases on similar claims filed against Bank of Cyprus Group in other countries are known.

According to the bank, the Arbitration Court of St. Petersburg and Leningrad region on May 20, 2013 rejected the claim of LSP International Limited against Bank of Cyprus due to the absence of the close connection of the litigation with the territory of Russia.

Moscow Arbitration Court on May 29, 2013 rejected the claim of Algeba Company against Bank of Cyprus.

Marfin Bank said that according to information from the register of court rulings the court arrested shares as a temporary measure to secure the claim submitted by Donetsk's RVT Trans under its claim against Cyprus Popular Bank Public Co Ltd (Cyprus).

"As the claim of RVT Trans concerns Cyprus Popular Bank, we are not expecting any actions that will hinder the functioning of public joint-stock company Marfin Bank, and the claimant does not have grounds for this," reads a posting on the Web site of Marfin Bank.

According to the report, Marfin Bank has not received any official documents on the issue.

According to Forbes, Alfa-group is affiliated with the claims.

"According to a partner of the Ukrainian subsidiary of a large law firm, Alfa-group is affiliated with the claimants. A manager of A1, the investment division of Alfa, speaking on the condition of anonymity, and a businessman acquainted with the court proceedings confirmed this. According to the businessman who is close to A1, around $50 million is frozen on the accounts at Cyprus Popular Bank," reads a posting on the Forbes Web site.

Bank of Cyprus said that professional law firms that are well known on the international markets represent its interests in court.

"According to the official position of Bank of Cyprus, the case is to be heard only by courts in Cyprus, and the court in Ukraine does not have powers to hear the case. No court rulings or decisions on the case in other jurisdictions [including Ukraine] can be legal," the financial institution said.

However, according to the statement of A1, which was sent to Interfax-Ukraine, A1 does not control Luxury Smart LLC and RVT Trans LLC and it does not have concern to the claims filed by the companies.

"From the article one can consider that A1 or the companies affiliated with it placed $50 million on accounts at Cyprus Popular Bank. The information is untrue," reads the statement of A1.

Bank of Cyprus (previously AvtoZAZbank) was founded in 1991 and Marfin Bank in 1993. The largest shareholders of Bank of Cyprus on April 1, 2012 were Leasing-Finance (38.5922%), Omix-Finance (19.1665%), Corner (19.2294%), and Bank of Cyprus (22.7853%).

As of April 2013, Cyprus Popular Bank Public Co Ltd held a 99.91% stake in Marfin Bank.

According to the National Bank of Ukraine, as of April 1, 2013 in terms of total assets (UAH 2.584 billion) Bank of Cyprus ranked 65th among the 175 banks operating in the country and Marfin Bank was 48th (UAH 4.021 billion).