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Bank of cyprus near loan deal with cdb

Cyprus

The Bank of Cyprus is in final talks over a Euro300 million (HK$3.42 billion) term facility with the China Development Bank that was agreed as part of a memorandum of understanding signed between the two banks earlier this year.

Costas Costa, the manager for international banking services, said preliminary agreement for the loan was reached last month. It was considered part of a bigger co-operation aimed at financing shipping, renewable energy and infrastructure projects with Chinese content.

He said the drawdown should take place 'very soon, following the expected signing of the documents'.

Costa said under the memorandum of understanding, CDB would provide the cash as a bilateral loan between the mainland bank and Bank of Cyprus, which will on-lend the proceeds.

'We will receive the China Development Bank loan and we will administer the relevant projects,' he said.

Costa added that financing of projects promoting Chinese exports could be in the form of syndicated loans.

He gave no details of how much was available under the larger package but its aim, according to the agreement between the two banks, was to 'actively strengthen the economic co-operation between Cyprus, Greece and China'.

George Pamboridis, the chairman of corporate services company Prudens, said the deal was linked to the US$5 billion fund set up by Beijing earlier this year to provide financial support to Greek shipowners ordering vessels at mainland shipyards.

CDB also made a Euro339.4 million loan in September 2009 to Piraeus Container Terminal to expand facilities at the Greek port after the Cosco Pacific-owned terminal operator won a concession to manage and operate the facility.

Both men were in Hong Kong after visiting Shanghai to encourage investment in Cyprus.

Costa also confirmed moves by the Bank of Cyprus to set up a representative office in China to serve Chinese clients and take advantage of growing mainland interest in Cyprus.

He said the office 'is at the stage where there is no board decision yet, but it is in our plans'.

Costa said the location of the office had not been decided but 'it will probably be in Shanghai'.

The bank's mainland customers are mainly involved in trading, but they also include holding companies with assets in other companies.

Costa said the bank would open a representative office in India in September to add to its network which included four offices in Russia and one each in Ukraine, South Africa, Romania, Serbia and Canada.

Pointing to Chinese interest in Cyprus, Costa said the country had the lowest corporate tax rate in the European Union at 10 per cent, while gross domestic product was forecast to grow 1.7 per cent this year and 2.2 per cent next year.

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