The group has also agreed to sell its subsidiary Bank of Cyprus Financial Services Ltd to Cynergy Capital.

The sale is expected to be completed by the end of 2018 and is subject to approval by the regulators of both the group and Bank of Cyprus UK (BOC UK).

The sale consideration of £103m is subject to the customary purchase price adjustments for the period up to completion, with the consideration payable in cash, of which half is deferred over 24 months from completion. 

Bank of Cyprus’s decision to sell its UK arm is in line with its strategy of delivering value for shareholders and focusing primarily on supporting the growing Cypriot economy.

The group and the UK arm will sign a cooperation agreement, which will see both organisations cooperating in a number of key areas going forward, including continuity of servicing for existing customers.

“While BOC UK has been part of the group for a long time, it has become increasingly clear that the UK business will benefit from the greater scale that can be achieved through the support of Cynergy,” said John Patrick Hourican, group CEO at Bank of Cyprus. 

“We expect this change in ownership to drive greater value for customers, colleagues and group shareholders. 

“The transaction will allow the bank in the UK to grow faster, thereby achieving the ambition for this business with new partners.”

Following the completion of the sale, BOC UK is expected to be rebranded to Cynergy Bank.

“The sale to Cynergy will enable us to focus on growing our franchise across enterprising business owners and savers in the UK, including the underserved property and SME market,” said Nick Fahy, CEO at BOC UK.

Bal Sohal, director at Cynergy, added: “We have been actively looking to invest in the UK banking sector, where we see significant opportunities for growth and to better address the needs of small businesses in the UK, including those of the Cypriot community. 

“Cynergy’s focus will be on delivering sustainable growth for the UK bank.  

“We plan to support the existing management team to deliver on the strategy it has for the bank and are committed to investing further capital to develop the business in the coming years.”