HELLENIC BANK PUBLIC COMPANY LTD (The Company was incorporated in Cyprus under the Cyprus Companies Law, Cap.113)

Transcription

1 HELLENIC BANK PUBLIC COMPANY LTD (The Company was incorporated in Cyprus under the Cyprus Companies Law, Cap.113) PROSPECTUS DATED 30 SEPTEMBER 2013 (In accordance with the Provisions of Regulation No 809/2004 (as amended) of the Commission of the European Union, the Public Offer and Prospectus Law of 2005 (as amended) and the Cyprus Companies Law, Cap.113) SHARE CAPITAL INCREASE OF UP TO WITH A NEW ORDINARY SHARES ISSUE The shares will be offered at a priority to existing shareholders at the ratio of 22 New Shares for every 5 shares held at the Record Date and to holders of Non Cumulative Perpetual Capital Securities ( NCPCS ) who will be registered in the NCPCS Holders Register at the Record Date, at the ratio of 22 New Shares for every 5 shares which would be owned if the NCPCS were converted to shares at the Record Date. The share price will be at 0, 05 per share. The Board of Directors of the Bank will, at its sole discretion, offer any shares which will not be subscribed by existing shareholders and NCPCS holders, using the same terms which will be offered to existing shareholders and holders of NCPCS at a price which will be equal to the share price of the offer. ISSUE OF CONTINGENT CAPITAL SECURITIES CCS 1 AND CCS 2 Issue up to 126,4 million Contingent Capital Securities 1 (CCS 1) of nominal value 1, offered to holders of NCPCS for voluntary exchange offer at the ratio of one (1) CCS 1 for every one (1) NCPCS of nominal value 1 Issue of up to 200 million Contingent Capital Securities 2 (CCS 2) of nominal value 1, offered to (a) holders of Non Convertible Bonds for voluntary exchange offer (The Non Convertible Bonds will be exchanged at nominal value and CCS 2 will be issued at nominal value) and (b) to other investors for cash. There is high probability that CCS 1 and CCS 2 will be automatically converted into ordinary shares of the Bank on or after their issuance, to the extent required, in order to increase the Common Equity Tier 1 ratio to at least 9%. CCS 1 will be subject to mandatory conversion into ordinary shares on a pro rata basis before any conversion of CCS 2. THIS IS AN ENGLISH TRANSLATION OF THE PROSPECTUS ISSUED IN GREEK IN THE FORMAT THAT HAS BEEN APPROVED BY THE CYPRUS SECURITIES AND EXCHANGE COMMISSION (CYSEC) AS THE COMPETENT AUTHORITY. THE GREEK TEXT OF THE PROSPECTUS AS IT HAS BEEN APPROVED BY CYSEC IS BINDING. THE ENGLISH TRANSLATION IS FOR INFORMATION PURPOSES ONLY. ISSUE MANAGER AND UNDERWRITER RESPONSIBLE FOR DRAWING UP THE PROSPECTUS HELLENIC BANK (INVESTMENTS) LTD

2 PROSPECTUS (In accordance with the Provisions of Regulation No 809/2004 (as amended) of the Commission of the European Union, the Public Offer and Prospectus Law of 2005 (as amended) and the Cyprus Companies Law, Cap.113) This document is important and requires your immediate attention. If you require further explanations and/or clarifications about the contents of this Prospectus you can be informed by professional financial brokers or other investment advisors. Hellenic Bank Public Company Ltd assumes full responsibility for the information included in this Prospectus and ascertains that, having taken all possible measures for this purpose, the information herein, is to its best knowledge in accordance with the facts and there are no omissions that could compromise its contents. The Directors of the Hellenic Bank Public Company Limited are also responsible jointly and severally for the information included in this Prospectus and ascertain that, having taken all possible measures for its drafting, the information herein, are to their best knowledge in accordance with the facts and there are no omissions that could compromise its contents. HELLENIC BANK PUBLIC COMPANY LIMITED (The Company was incorporated in Cyprus under the Cyprus Companies Law, Cap.113) SHARE CAPITAL INCREASE OF UP TO WITH A NEW ORDINARY SHARES ISSUE The shares will be offered at a priority to existing shareholders at the ratio of 22 New Shares for every 5 shares held at the Record Date and to holders of Non Cumulative Perpetual Capital Securities ( NCPCS ) who will be registered in the NCPCS Holders Register at the Record Date, at the ratio of 22 New Shares for every 5 shares which would be owned if the NCPCS were converted to shares at the Record Date. The share price will be at 0,05 per share. The Board of Directors of the Bank will, at its sole discretion, offer any shares which will not be subscribed by existing shareholders and NCPCS holders, using the same terms which will be offered to existing shareholders and holders of NCPCS at a price which will be equal to the share price of the offer. ISSUE OF CONTINGENT CAPITAL SECURITIES CCS 1 AND CCS 2 Issue up to 126,4 million Contingent Capital Securities 1 (CCS 1) of nominal value 1, offered to holders of NCPCS for voluntary exchange offer at the ratio of one (1) CCS 1 for every one (1) NCPCS of nominal value 1 Issue of up to 200 million Contingent Capital Securities 2 (CCS 2) of nominal value 1, offered to (a) holders of Non Convertible Bonds for voluntary exchange offer (The Non Convertible Bonds will be exchanged at nominal value and CCS 2 will be issued at nominal value) and (b) to other investors for cash. There is high probability that CCS 1 and CCS 2 will be automatically converted into ordinary shares of the Bank on or after their issuance, to the extent required, in order to increase the Common Equity Tier 1 ratio to at least 9%. CCS 1 will be subject to mandatory conversion into ordinary shares on a pro rata basis before any conversion of CCS 2 AUTHORISED SHARE CAPITAL divided into ordinary shares of nominal value 0,01 each ISSUED SHARE CAPITAL ,20 divided into ordinary shares of nominal value 0,01 each The Prospectus has been approved by the Cyprus Securities and Exchange Commission ( CySEC ) solely for the purpose of providing information to investors in compliance with the Public Offer and Prospectus Law of 2005 (as amended) of the Republic of Cyprus, which transposes into national law Directive 2003/71/EC and Regulation 809/2004 (as amended) of the Commission of the European Union. Prospectus Date: 30 September 2013

3 The approval of the Prospectus should not be considered as a recommendation to invest in the issuer. Before any investment decision is obtained, investors should consult their investment advisor and/or any professional consultant, as they see fit. Hellenic Bank (Investments) Ltd, which signs the Prospectus, is the Underwriter Responsible for Drawing up the Prospectus. This offer is only applicable in Cyprus, Greece and the United Kingdom and is only addressed to persons that can legally accept it. More specifically, and in compliance with relevant securities law in the following countries, this offer is not addressed in any way (in writing or otherwise), directly or indirectly, within or to the United States (including its territories and dependencies, any state of the United States and the district of Columbia), Canada, Australia, South Africa, or Japan, or any other jurisdiction in which according to the laws of that jurisdiction, this Offer or the postage / distribution of this offering circular is illegal or constitutes breach of any applicable law, rule or regulation or to U.S. Persons (within the meaning of Regulation S of the United States Securities Act of 1933, as amended). All above jurisdictions will be referred to from hereon as Excluded Territories. For this reason, it is forbidden to mail, distribute, send or otherwise promote copies of this Prospectus and any other relevant documents or material relating to this Offer into or from any Excluded Territory or the subsequent participation in the offer for the issue of New Ordinary Shares, in the CCS 1 and CCS 2 Voluntary Exchange Offer and the investment in CCS 2 by any person from and/or within the Excluded Territories. Applications have been made by Hellenic Bank Public Company Ltd for a certificate of approval under Article 18 of Directive 2003/71/EC of the European Parliament and Council, as implemented in Cyprus, to be issued by the Cyprus Securities and Exchange Commission to the competent authority in Greece and United Kingdom, in which it will be certified that that this Prospectus has been prepared in accordance with Directive 2003/71/EC of the European Parliament and Council. This Prospectus includes forward-looking statements. These forward-looking statements are identified by the use of terms and phrases such as believe, anticipate, will, should, may, could, plan and other similar terms and phrases and the negative form of the above statements,. By nature, these forward-looking statements involve risks, uncertainties and the factors described within the context of the forward-looking statements may cause the actual future results or events to be materially different from those expressed or implied in this Prospectus. The forward-looking statements are subject to risks, uncertainties and assumptions, including, amongst others, changing conditions in businesses and the market. In view of the risks, uncertainties and assumptions, any projections mentioned herein may not be realised. Any references to trends or activities in the past do not provide a guarantee that these trends or activities will be continued in the future. Investors are warned not to place undue reliance on forward-looking statements in relation to future events that cannot be predicted today. Prospective investors must carefully consider all the information included in this Prospectus before making an investment decision regarding the issue of shares and/or CCS 1 and CCS 2 issued with the Prospectus. Such potential decision contains risks that are described in Part II of this Prospectus. CCS 1 and CCS 2 might not be a suitable investment for all investors. Each potential investor should consider his own personal circumstances in order to assess the suitability of investing in CCS 1 or CCS 2. THIS IS AN ENGLISH TRANSLATION OF THE PROSPECTUS ISSUED IN GREEK IN THE FORMAT THAT HAS BEEN APPROVED BY THE CYPRUS SECURITIES AND EXCHANGE COMMISSION (CYSEC) AS THE COMPETENT AUTHORITY. THE GREEK TEXT OF THE PROSPECTUS AS IT HAS BEEN APPROVED BY CYSEC IS BINDING. THE ENGLISH TRANSLATION IS FOR INFORMATION PURPOSES ONLY.

4 CONTENTS CONTENTS... 4 PART Ι. SUMMARY NOTE... 6 PART ΙΙ: RISK FACTORS PART ΙΙΙ: DRAWING UP THE PROSPECTUS / PROFESSIONAL ADVISORS PROFESSIONAL ADVISORS PART ΙV. DETAILS OF THE TERMS OF THE ISSUE Α. ISSUE OF NEW SHARES...75 Β. EXCHANGE OFFER OF NCPCS TO CCS C. EXCHANGE OFFER OF NON-CONVERTIBLE BONDS TO CONVERTIBLE CONTINGENT SECURITES D. EXCHANGE INFORMATION TABLE PART V: INFORMATION ABOUT THE ISSUER GENERAL INFORMATION GROUP MILESTONES BANK OBJECTIVES ACTIVITIES ACTIVITIES IN CYPRUS OVERSEAS OPERATIONS SUBSIDIARY COMPANIES HEAD OFFICE SUPPORT SERVICES GROUP STRUCTURE PERSONNEL BOARD OF DIRECTORS AND KEY MANAGEMENT FIGURES BOARD OF DIRECTORS BOARD OF DIRECTORS COMMITTEES KEY MANAGEMENT PERSONNEL STATEMENTS OF THE MEMBERS OF THE BOARD OF DIRECTORS AND KEY MANAGEMENT PERSONNEL PARTICIPATION OF BOARD DIRECTORS AND KEY MANAGEMENT PERSONNEL IN THE BOARD OF DIRECTORS OF OTHER COMPANIES CONTRACTS AND REMUNERATION OF BOARD DIRECTORS, KEY MANAGEMENT PERSONNEL AND SUPERVISORY BODIES SHARE AND LOAN CAPITAL SHARE CAPITAL MAIN SHAREHOLDERS PARTICIPATING INTERESTS OF BOARD DIRECTORS AND KEY MANAGEMENT PERSONNEL LOAN CAPITAL EQUITY AND LOAN CAPITAL SOURCES OF CAPITAL STATEMENT FOR THE SUFFICIENCY OF WORKING CAPITAL DIVIDEND POLICY GROUP STRATEGY OTHER INFORMATION CAPITAL ENHANCEMENT PROCESS PROSPECTS AND FINANCIAL POSITION PART VΙ. FINANCIAL INFORMATION FINANCIAL INFORMATION FOR THE PERIOD ENDED 30 JUNE 2013 AND FOR THE YEARS 2012, 2011,

5 2. ANALYSIS OF GROUP FINANCIAL INFORMATION ANALYSIS OF RESULTS FOR THE PERIOD ENDED 30 JUNE ANALYSIS OF FINANCIAL INFORMATION FOR THE YEAR ANALYSIS OF FINANCIAL RESULTS FOR THE YEAR ANALYSIS OF FINANCIAL RESULTS FOR THE YEAR LOSS FROM DISCONTINUED OPERATIONS AFTER TAXATION SEGMENTAL REPORTING (UNAUDITED) INVESTMENTS INVESTMENTS IN DEBT SECURITIES RECLASSIFICATION OF DEBT SECURITIES EQUITY SECURITIES IMMOVABLE PROPERTY PART VIΙ. STATUTORY AND GENERAL INFORMATION RELEVANT ARTICLES FROM MEMORANDUM MATERIAL CONTRACTS OTHER STATUTORY INFORMATION PURPOSE AND PROCEEDS FROM CAPITAL ENHANCEMENT PLAN EXPENSES RELATED TO THE ISSUE TAX REGIME LEGAL FRAMEWORK DOCUMENTS AVAILABLE FOR INSPECTION INCORPORATION BY REFERENCE CONSENTS DEFINITIONS

6 PART Ι. SUMMARY NOTE PROSPECTUS This summary note has been compiled in accordance with the Public Offer and Prospectus Law of 2005 (L. 114(Ι)/2005) (as amended) and the Regulation (EC) No 809/2004 (as amended) of the Commission of the European Union. It contains a short description of the activities and business strategy of Hellenic Bank Public Company Ltd. It also contains information (a) for the issue and listing in the CSE of up to 3,3 billion ordinary shares, (b) the issue and listing in the CSE up to Contingent Capital Securities 1 and (c) the issue and listing in the CSE up to Contingent Capital Securities 2, which are the subject of this document. The above issues are in accordance with the decisions of the Extraordinary General Meeting of the shareholders of the Bank which was held on 14 th August Following the adoption by the House of Representatives of Law 105(I)/2013 amending the Restructuring of Financial Institutions Laws (L. 200(I)/2011), the Bank, after consulting with the Central Bank (supervisory authority) and the Minister of Finance, follows the procedure of the simultaneous exchange of the Prescribed Capital Instruments with new Capital Instruments, based on the provisions and procedure indicated in Article 5B. The Summary Note contains notification requirements, defined as Items. The Items are numbered in Parts A - Ε (Α.1 - Ε.7). This Summary Note contains all the Items which are required to be included in a summary about the kind of securities offered in this Propsectus and about the issuer. Since certain Items are not required to be mentioned, some gaps may possibly exist in the numbering sequence. Although an Item may be required to be introduced in the Summary Note due to the kind of securities and the Issuer, it is possible that any information regarding this Item would not be provided. In such a case a summary description is included in the Summary Note with the reference Not applicable. Α. Introduction and Warnings Α.1. Warning: This Summary Note should be considered as the introduction to the Propsectus. Investors should base their decision to invest in securities on the Propsectus after having studied the Propsectus as a whole. Where a claim relating to information contained in the Propsectus is referred to the court, the plaintiff investor may, pursuant to the national legislation of the member states, be obliged to bear the cost of translating the Propsectus before legal proceedings commence. Civil liability is assigned only to the persons who submitted the Summary Note, including any translation of it, only where the said Summary Note is misleading, inaccurate or is not consistent when read in conjunction with the other parts of the Propsectus or does not provide, when read in conjunction with the other parts of the Propsectus, the key information required to assist investors in examining the possibility to invest in the securities. Α.2. Not applicable.

7 Β. Issuer PROSPECTUS Β.1. Legal and Trading Name of the Issuer Hellenic Bank Public Company Ltd. Β.2. Seat and legal form of the Issuer, legislation pursuant to which the Issuer is acting and country of incorporation. Hellenic Bank was incorporated in Cyprus, on 29 May 1974 as a public company with registration number 6771, in accordance with the provisions of Cyprus Companies Law, Cap.113. The Bank has a license for banking operations in accordance with the Banking Operations Law of The registered office and main seat of the Bank is 200 Corner Limassol & Athalassas Avenue, 2025 Strovolos, P.O.Box 24747, 1394 Nicosia, Cyprus. The articles of incorporation of the Company, which is available for inspection by the public, states the missions of the Company, which amongst others, are: The undertaking of banking and financial activities, the extension of loans, the, acceptance of deposits and the performance of other activities that fall under the operations of Commercial Banks, Financing Institutions and Assignees. Β.3. Services and activities of the Bank The Hellenic Bank offers a wide range of services in the financial sector to individuals, companies, government and semi-governmental organizations. The main activities of the Group include acceptance of deposits, lending as well as other banking services, such as overseas transfers related to imports and exports and issuance of guarantees. It also offers, factoring, insurance and investment services. The Bank operates in Cyprus and offers its services through a network of 60 branches in the whole of Cyprus. In addition, the Bank operates Representative Offices in Johannesburg in South Africa, in Moscow, in St Petersburg and in Kiev. In April 2009, its subsidiary company Limited Liability Company Commercial Bank Hellenic Bank obtained a license of carrying out banking operations in Russia. On 11 January 2011, the subsidiary began its full banking operations in Russia through a single branch, offering a full range of banking services. Β.4a. & B.4b Recent Trends The financial environment in Cyprus has changed dramatically in Key events that led to the current adverse economic circumstances are summarised as follows: The two largest banks of the country, Bank of Cyprus Public Company Ltd ( Bank of Cyprus ) and Cyprus Popular Bank Public Co Ltd ( Laiki, Laiki Bank ) had significant capital needs (following the evaluation of their capital adequacy by the Central Bank of Cyprus based on PIMCO s due diligence exercise on the credit portfolios of the largest banks in Cyprus), without the state being able to support them. According to a relevant report by the International Monetary Fund dated 3 April 2013 the approach followed for the coverage of those capital shortfall, avoids putting an additional debt burden on the tax payer and contributes towards setting the public debt on a viable track. The inability of the state to re-capitalise these banks, led to a haircut on depositors of the two banks. This further shook the credibility of the country s banking system, which in turn led to the implementation of restrictive measures on bank transactions and on opening of accounts.

8 The ineffective management of public finances, which resulted to an increase in public debt, and the delay observed in taking corrective measures, has placed Cyprus under a long and difficult programme of fiscal consolidation, which limits the capability of allocating resources to growth. Due to the above factors, in combination with the already over-indebted households and businesses (ratio of Private Sector Lending to GDP at 285%, against 103% of the Eurozone, for 2012), the economy entered into a severe recession with an expected large contraction in GDP, increase in unemployment and increase in non-performing loans. From a financial perspective, market liquidity has contracted significantly and it is not expected to recover soon for a number of reasons. Firstly, banks are implementing deleveraging programmes with a view to shrinking their loan portfolios and therefore, new lending will be very limited. Secondly, the liquidity that was previously available in the market was made up to a significant extent by non-resident deposits which, through a Central Bank directive, may be placed under stricter liquidity criteria. Thirdly, the significant outflows of both resident and non-resident deposits have decreased and will continue to decrease the deposit balances of the system. Finally, while Cypriot banks continue to receive Emergency Liquidity Assistance (ELA), there will be limited ability for credit growth. Sources of economic growth seem to be limited. While the services sector has taken a serious hit, the magnitude of the loss has not yet been determined, as Cyprus is still promoted as a financial centre, due to the specialised services it offers and the attractive tax structure. Tourism seems to maintain a positive outlook, mainly because of the Russian tourist market. Other formerly growing sectors such as construction are going through a period of significant restructuring. As far as the energy sector is concerned, long-term prospects for the exploitation of natural gas are positive, while on a mediumterm time horizon energy related operations are expected to accelerate and boost economic activity. Activity in the sector has already been noted, in the registration of new energy-related companies and the organisation of several relevant conferences. In the banking sector, Bank of Cyprus after the absorption of Laiki has a market share of almost 50% of the local credit market. Bank of Cyprus is expected to soon complete its recapitalisation and gradually recover. Co-operative Institutions are going through a period of restructuring, which will change dramatically their way of operating and will bring them closer to the banking sector. Greek (recapitalised) banks seem to be expanding their operations in Cyprus. The Bank faces a number of uncertainties, including the following: Increased risk of further deterioration of the quality of the loan portfolio and increasing non-performing loans with negative impact on financial results and future business activities. Liquidity risk, a large outflow of deposits could lead the Bank to external funding either from the European Central Bank or other Eurosystem programmes Further slowdown of the Cypriot economy with a negative impact on the operating results of the Bank While the restrictive measures remain, the message sent abroad implies and reinforces the economic instability of the country. A gradual relaxation of the measures and their eventual abolishment will help support the credibility of the country s banking system and the growth prospects of Hellenic Bank. As far as the Russian operations of the Group are concerned, these are expected to continue in a positive economic environment, as the country continues to show positive growth. The magnitude of the operations is still relatively small and therefore not expected to have a significant impact on the Group s results.

9 Β.5. Description of the Group and position of the issuer Hellenic Bank is the holding company of the Group. The following are subsidiary companies of Hellenic Bank: Hellenic Bank (Investments) Ltd, Hellenic Bank Trust and Finance Corporation Ltd, Pancyprian Insurance Ltd, Hellenic Alico Life Insurance Company Ltd, Hellenic Insurance Agency Ltd (Greece), Hellenic Insurance Agency Ltd, Limited Liability Company Commercial Bank Hellenic Bank, and Borenham Holdings Ltd. B.6. Main Shareholders At the date of publication of the Prospectus, the shareholders that, in accordance with the Shareholder Register, possess directly or indirectly, more than five per cent (5%) of the issued share capital are the following: Shareholder Name Direct holding Indirect holding Total holding Percentage % Holy Archbishopric of ,20 Cyprus Fathullin Renat ,73 Credit Suisse AG ,90 Bank of Cyprus Group , ,05 Other shareholders ,95 Total All shareholders of the Bank have the same voting rights. At the date of publication of the Prospectus, the Bank has shareholders. The Bank is not owned or controlled either directly or indirectly by anyone. It is noted that the Holy Archibishopric of Cyprus and its related parties own NCPCS of 7,9 million as well as Non-Convertible Bonds of 20 million. Β.7. Selected financial information The following financial information for the years 2010, 2011 and 2012 is based on the annual audited consolidated financial statements of the Group for the years 2010, 2011 and The consolidated financial statements for the years 2010, 2011 and 2012 have been audited by the external auditors of the Group. The unaudited financial information for the six month period ended 30 June 2013 is based on the condensed consolidated financial statements of the Group. The financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRSs) as adopted by the European Union. In addition, the financial statements have been prepared in accordance with the requirements of the Cyprus Companies Law, Cap.113, the Cyprus Stock Exchange Laws and Regulations and the Transparency Requirements (Securities Admitted to Trading on a Regulated Market) Law. The independent auditors report for the reported years ( ) is not qualified. That is, in their opinion, the consolidated and the Company s separate financial statements give a true and fair view of the financial position of the Group and the

10 Company as at 31 December 2010, 2011 and 2012, and of their financial performance and their cash flows for the year that ended in accordance with International Financial Reporting Standards as adopted by the EU and the requirements of the Cyprus Companies Law, Cap The external auditors report for the year ended 31 December 2012 included an emphasis of matter, which draws attention to the estimates and assumptions used for the preparation of the financial statements on the going concern basis, the current economic uncertainties prevailing in Cyprus and the restructuring of the banking system in Cyprus. These factors could adversely affect the financial results, capital requirements and liquidity of the Company and the Group. SELECTED FINANCIAL INFORMATION FROM THE CONSOLIDATED INCOME STATEMENT For the six month period ended 30 June 2013 and 30 June 2012 and for the years ended 31 December 2010, 2011 and /1/ /6/2013 (unaudited) 000 1/1/ /6/2012 (unaudited) (audited) (audited) (audited) 000 Net interest income Other net income Total net income after the impairment of Greek Government Bonds Total net income before the impairment of Greek Government Bonds Total expenses (69.479) (67.456) ( ) ( ) ( ) Profit from ordinary operations before provisions (Loss)/profit before taxation (31.740) (13.222) (86.921) (Loss)/profit for the period/year from continuing operations (35.226) (21.932) (99.545) Loss on termination of operations of BNG (10.285) (34.082) (Loss)/profit for the period/year (45.511) (21.932) (99.545) (Loss)/profit attributable to: Non-controlling interests

11 Owners of the parent company (46.143) (23.440) ( ) 8.889

12 Note: On 26 March 2013, the Bank, as a result of intergovernment understanding of the governments of Greece and Cyprus, at the request of the Troika and according to the instructions of the Ministry of Finance and the Central Bank, consented to the sale of its Branch Network in Greece (BNG) to the Piraeus Bank SA with immediate effect. Under this agreement the Bank sold the total of cash, deposits, loans, software, plant and equipment of the Branch Network in Greece (BNG) for a total amount of 29 million and covered in cash the negative difference between the assets and liabilities disposed), which amounted to 118 million. All assets and liabilities that were part of the above agreement are being reviewed by a mutually accepted independent expert. In addition, the results of the BNG will be audited by external auditors and any adjustments that may occur will be reflected in the year end results. The effect of the discontinued operations on the Group s results is presented as discontinued operations in the Income Statement (Loss from discontinued operations of the BNG). The comparative consolidated Income Statement for the six month period ended 30 June 2012 is restated as if the operations of the Branch Network in Greece had been discontinued from the beginning of the year It is clarified that the Income Statement for the year 2012 does not include any adjustments relating to the above and are in line with the audited consolidated financial statements for the year SELECTED FINANCIAL INFORMATION FROM THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 June 2013 (unaudited), 31 December 2010, 2011 and /6/2013 (unaudited) (audited) (audited) (audited) 000 Loans and advances to customers Cyprus Greece Russia Total assets Customer deposits and other customer accounts Cyprus Greece Russia Loan capital Share capital Total equity

13 SIGNIFICANT CHANGES IN FINANCIAL INFORMATION PROSPECTUS Six month period ended 30 June 2013 (Unaudited) 1. The loss after taxation attributable to the owners of the parent company for the period ended 30 June 2013, amounted to 46,1 million compared to profit of 14,9 million for the corresponding prior year period and it included the loss from discontinued operations arising from the sale of the Branch Network in Greece (BNG). 2. On 26 March 2013, the Bank gave its consent to sell the Branch Network in Greece to Piraeus Bank S.A. with immediate effect, as a result of intergovernmental understanding between the Greek and Cyprus governments at the request of Troika, according to the instructions of the Ministry of Finance and the Central Bank. Under this agreement, the Bank sold the total of cash, deposits, loans, software, plant and equipment of the Branch Network in Greece for a total amount of 29 million and covered in cash the negative difference between the assets and liabilities disposed the total amount of which was 118 million. 3. Total gross customer loans and advances in Cyprus show a decrease of 4% while total customer deposits in Cyprus amounted to 5,7 billion, decreasing by 20% from December Equity attributable to the owners of the Bank was 439,3 million as at 30 June 2013, compared to 481,7 million as at December The return on equity of the Group based on the results of the six month period ended 30 June 2013 was -7,8%, excluding the loss on sale of the BNG (December 2012: -5,1%). 5. Under Pillar 1 of the Central Bank of Cyprus Directive for the Calculation of Capital Requirements and Large Exposures, the Group s Capital Adequacy Ratio at 30 June 2013 was at 14,59% (December 2012: 13,64%) (Bank: 13,79%), the Tier 1 Ratio was 11,17% (December 2012: 10,89%) (Bank: 10,98%) and the Common Equity Tier 1 Ratio was 8,05% (December 2012: 8,19%) (Bank: 7,82%). Correspondingly, the minimum required supervisory ratios for the Group, taking into account the increment, which was calculated based on the percentage of the bank s assets over the Gross Domestic Product of the Republic of Cyprus, enforced from 31 December 2012, were 11,63% (Capital Adequacy ratio), 9,63% (Tier 1 ratio) and 8,13% (Common Equity Tier 1 ratio). Year 2012 It is noted that the audited consolidated Income Statement for the year ended 31 December 2012 includes the activities of the Branch Network in Greece. 1. For the year ended 31 December 2012, the loss after taxation attributable to the owners of the parent company amounted to 23,4 million compared to a loss after taxation of 100,7 million in It is noted that in 2011 an impairment of Greek Government Bonds (GGB) amounting to 77,0 million, was recognised. Excluding the impairment of the GGBs, loss after taxation attributable to equity holders of the parent company, has improved marginally. 2. Provisions for impairment of the value of loans and advances in the Income Statement for the year ended 31 December 2012, amounted to 162,4 million which represents an increase of 19,9 million from the corresponding 2011 amount. 3. Total gross customer loans and advances marginally declined by 1% in comparison to December 2011 reaching 5,6 billion. Customer deposits rose by 9% from 7,1 billion in December 2011 to 7,8 billion.

14 4. Equity attributable to the owners of the Bank reached the amount of 481,7 million as at 31 December 2012, compared to 431,6 million as at December The increase is a result of the capital raised through the Capital Enhancement Plan. The return on equity of the Group based on the results of the year ended 31 December 2012 was -5,1% (December 2011: -20,9%). 5. Under Pillar 1 of Basel II, the Group s Capital Adequacy Ratio was 13,6% (December 2011: 12,9%), the Tier 1 Ratio was 10,9% (December 2011: 10,1%) and the Common Equity Tier 1 Ratio was 8,2% (December 2011: 7,1%) as at 31 December Correspondingly, the minimum required supervisory ratios for Hellenic Bank, taking into account the increment, which is calculated based on the percentage of the bank s assets over the Gross Domestic Product of the Republic of Cyprus, enforced from 31 December 2012, were 11,7% (Capital Adequacy ratio), 9,7% (Tier 1 ratio) and 8,2% (Common Equity Tier 1 ratio). Year On 31 December 2011, following the finalization of the terms of the agreement between Greece and its private creditors concerning the repayment plan of the Greek debt, the Group of Hellenic Bank proceeded with an impairment provision of 77,0 million of the Greek Government Bonds it held. The total amount of the impairment provision represents the 70% of the nominal value of bonds held by the Bank, amounting to 110 million and classified as Held to Maturity. As a result, following the impairment cost of the Greek Government Bonds, the Group showed losses before taxation for the year ended 31 December 2011 amounting to 86,9 million compared to profits of 15,3 million for the respective period of 2010.Excluding the cost of impairment of the Greek Government Bonds, the profit of the Group before provisions amounts to 132,6 million, recording an increase of 47% compared to the corresponding prior year period. 2. Total net income of the Group excluding the impairment cost of the Greek Government Bonds increased by 12% compared to At the same time, total expenses decreased by 6% reaching 168,6 million compared to 178,7 million for the year Provisions for impairment of loans and advances in the Income Statement for the year ended 31 December 2011 amounted to 142,5 million which represents an increase of 67,8 million from the corresponding 2010 amount. 4. Total gross loans and advances to customers increased by 4% reaching the amount of 5,6 billion at the end of 2011 compared to 5,4 billion at December Customer deposits recorded an increase of 4%, reaching the amount of 7,1 billion compared to 6,9 billion as at December Equity attributable to the owners of the Bank reached the amount of 431,6 million as at 31 December 2011, compared to 531,9 million as at 31 December The return on equity of the Group based on the results of the year 2011 was -20,9% (December 2010: 1,7%). 6. The Group s Capital Adequacy Ratio, based on the relevant Central Bank of Cyprus Directive for the calculation of the capital requirements and large exposures (Basel II), was 12,9% (December 2010: 15,0%) and Tier 1 Ratio was 10,1% (December 2010: 11,9%), exceeding the minimum required supervisory ratios of 11,5% and 9,5% respectively. The Common Equity Tier 1 Ratio was 7,1% (December 2010: 9,0%) and was lower than the Central Bank of Cyprus minimum threshold of 8%.

15 Year The Group showed profit before taxation for the year ended 31 December 2010, amounting to 15,3 million compared to profit of 36,1 million for the year Total net income remained at the same levels as the prior year, reaching the amount of 268,7 million compared to 269,6 million for the year 2009, while at the same time total expenses increased by 5% reaching 178,7 million compared to 170,2 million for Provisions for impairment of loans and advances in the Income Statement for the year ended 31 December 2010 amounted to 74,7 million which represents an increase of 11,5 million in comparison to Total gross customer advances increased by 8% reaching the amount of 5,4 billion compared to 5,0 billion as at December 2009, while customer deposits increased by 4%, reaching the amount of 6,9 billion compared to 6,6 billion as at December Equity attributable to the owners of the Bank reached the amount of 531,9 million as at 31 December 2010, compared to 519,9 million as at 31 December The return on equity of the Group based on the results of the year 2010 was 1,7% (December 2009: 5,7%). 6. As at 31 December 2010, the Group s Capital Adequacy Ratio, based on the relevant Central Bank of Cyprus Directive for the calculation of the capital requirements and large exposures (Basel II), was 15% (December 2009: 14%) while Tier 1 Ratio was 12% (December 2009: 9,9%). Note: In this Propsectus, references made to capital adequacy ratios of the Bank or the Group that relate to prior periods have been calculated according to the applicable guidance of the period/year under reference. It must be specified that the guidance that was used for the calculation of capital requirements of the aforementioned periods differs from CRD IV and in order to comply with the provisions of CCS 1 and CCS 2 calculations of capital adequacy ratios will be performed based on the provisions of the applicable legislation which is in force which may differ from the guidance used in the calculations of prior periods.

16 B.8. Selected pro forma financial information PROSPECTUS Not applicable. Β.9. Projection or estimation of profits Not applicable. No projections or estimation of profits are included in the Prospectus. Β.10. Reservations in the auditors' report for the historical financial information The auditors' report for the year ended 31 December 2012 includes an emphasis of matter as follows: We draw your attention to notes 2.1 and 41 to the financial statements which refer to the estimates and assumptions used for the preparation of the financial statements on the going concern basis, the current economic uncertainties prevailing in Cyprus and the restructuring of the banking system in Cyprus. These factors could adversely affect the financial results, capital requirements and liquidity of the Company and the Group. Our opinion is not qualified in respect of this issue. Β.11. Working capital The Bank, states that in its opinion, its working capital is sufficient to finance the current activities of the Bank for the 12 months following the date of this Prospectus. Β.12. Declaration Since the date of the latest published audited consolidated financial statements (31 December 2012) up until the date of this Prospectus, the Group s prospects have been affected mainly by the following: - The decisions of the Eurogroup on the 25 March 2013 and of the respective agreement between the Cyprus Government and the European Stability Mechanism (ESM) for the funding of Cyprus and the restructuring of its banking sector (Memorandum of Understanding), - The sale of the Branch Network in Greece to Piraeus Bank SA on the 26 th of March, 2013 (with immediate effect ) as a result of the transnational agreement of the governments of Greece and Cyprus, at the request of the Troika and in accordance with the instructions of the Ministry of Finance and the Central Bank, - The new economic and supervisory environment established as a result of the above and in particular as a result of capital controls applied in the banking transactions which led to the trust and the confidence of depositors to be negatively affected, - The capital shortfall of 294 million that the Bank has been requested by the Central Bank to cover by the 31 th October 2013 following the assessment of the quality of the loan portfolios of financial institutions operating in Cyprus conducted by PIMCO (based on the adverse scenario of the due diligence exercise and after the sale of the Branch Network in Greece), - The obligation to maintain on a continuous basis Common Equity Tier 1 ratio of at least equal to 9% (from 31 October 2013), - The slowdown and worsening of the Cyprus economy fiscal indicators which have and are expected to have an adverse impact on the Group activities, the financial position and operating results, - The contingent failure of the Bank to secure the required capital from the private sector (Capital Restructuring and Enhancement Plan) which will result in state aid contribution through the Troika program of the Official Sector Reform and significant changes in the control, the management, the financial position and the activities of the Bank,

17 - The risk of further deterioration of the quality the loan portfolio and the increase of non-performing loans which will have a negative impact on the future results and activities of the Bank, - The liquidity risk - The negative revaluations and impairments in the fair value of the financial assets of the Group. From the date of the last published audited consolidated financial statements (31 December 2012) up until the date of this Prospectus, the commercial position, the activities and the financial position of the Group have been negatively affected by the events described above. The impact of the abovementioned events on the financial position of the Group up to the period ending 30 June 2013 is reflected in the unaudited financial results of the respective period, which have been announced and are included in this Prospectus by referral. From the date of the unaudited financial results for the period ending 30 June 2013 up until the date of this Prospectus, the commercial position, the activities and the financial position of the Group, continued to be negatively affected by the events listed above as were the results for the period ending 30 June 2013 and specifically, among others: (a) there was a continuing deposit outflow, with a decrease of 3,5%, (b) additional past due days were recorded relating to loan repayments and (c) liquidity indices are in deviation from the supervisory thresholds. Β.13. Issuer solvency Following the completion of the due diligence on the credit portfolios of financial institutions operating in Cyprus, including Hellenic Bank, carried out by PIMCO in accordance with the instructions of the Central Bank of Cyprus, the Central Bank of Cyprus determined the capital needs of financial institutions involved in the exercise. The capital needs according to the Central Bank of Cyprus, shall be met by the end of 2013, either from private sources or through state aid funded by the Financial Sector Reform Program ("Program") of the Troika using already committed funds. Within this framework, the Group and the Bank have the obligation to maintain on an ongoing basis at least 9% Common Equity Tier 1 ratio, starting from the 31 October At the same time, by 31 October 2013 the Bank has to cover a capital shortfall of 294 million (based on the adverse scenario of the assessment exercise undertaken by PIMCO and after the sale of the Branch Network in Greece). The Board of Directors of the Bank at its meetings held on the 11th of July 2013 and the 18th July 2013 set a Restructuring and Capital Enhancement Plan ("Plan") aiming in attracting capital from private sources at the level and structure required by the Program in order to cover its relevant capital needs. Following the adoption by the House of Representatives of Law 105(I)/2013 amending the Restructuring of Financial Institutions Law (L. 200(I)/2011), the Bank, after consulting with the Central Bank (supervisory authority) and the Minister of Finance, follows the procedure of replacing the Prescribed Capital Instruments with new Capital Instruments, in accordance with the provisions and procedures suggested by Article 5B, whose content is described in detail in this Prospectus. Article 5B refers to the option of a financial institution (which is in a capital shortfall that had not been addressed on a timely basis and hence support measures were necessary) to initiate the process of amending the issuance terms of its Capital Instruments, which might include their exchange with other Capital Instruments. The Bank applies this specific provision in the context of this Prospectus, having as an objective the exchange of one or more of its prescribed Capital Instruments with new Capital Instruments, through the procedure provided by the specific Laws.

18 The application of this provision, within the implementation context of the Plan, increases the Bank s likelihood to cover the capital shortfall of 294 million, as set by the Central Bank of Cyprus. In the event that the Group does not manage to secure the required capital for its full recapitalisation ( 294 million), it will be subject to state aid rules. In that case, the relevant regulations and other provisions that will be in force at that time will be implemented, which include, among others, the Restructuring of Financial Institutions Laws of 2011 to of 2013 (L. 200(I)/2011 as amended), The Resolution of Credit and Other Institutions Law (L.17(I)/2013), as amended, the Banking Laws of 1997 to 2013 (L.66(I)/1997, as amended), the Communication from the Commission on the application, from 1 August 2013, of State aid rules to support measures in favour of banks in the context of the financial crisis which can be found at the Memorandum of Understanding (including but not restricted to paragraphs 1.22, 1.29 and 1.30). In accordance with Article 5A of L.200(I)/2011 as amended, the Council of Ministers, after having consulted with the Central Bank, can decide on the management of the Bank s Capital Instruments, as a condition for the support measures taken for the restoration of capital adequacy and/or for the restriction of state aid at the minimum level. In accordance with the relevant announcement of the Central Bank of Cyprus, dated August 1, 2013: "If capital needs are not covered in full from the private sector, the bank will receive state aid through the Program. In this case, state aid rules will apply which, inter alia, entail the mandatory conversion or writing down of subordinated debt. State aid, which is available through the Program funds, will not be granted before equity, hybrid capital and subordinated debt holders have fully contributed to offset any capital shortfall. Further, under sub heading Recapitalisation of the banking sector, in the same announcement, it is stated that " There will be no new bail-in of depositors beyond the one already completed at Bank of Cyprus and Laiki Bank. All other recapitalisations will be achieved through private funds or through funds reserved from the Program. Β.14. Issuer dependence There is no dependence of the Bank on any of its subsidiary companies. B.15. Main activities of the Issuer The activities of the Group include the whole spectrum of banking and financial services. The main areas of activity of the Group include financing, investment and insurance services as well as custodian services. The Bank offers banking and financial services through its branches in Cyprus and Russia and operates Representative Offices in Moscow, Johannesburg, St Petersburg and Kiev. Until the 25 th of March 2013, the Bank also offered banking and financial services through a Branch Network in Greece, which was sold on 26 March The Bank operates through 60 retail branches throughout Cyprus and offers business banking services via three Corporate Centers and seven Commercial Centers. In addition, it operates four International Business Centers and a Shipping Business Center. Β.16. Control of Issuer The Bank is not owned or controlled, directly or indirectly by any person. Β.17. Credit Rating

19 The credit risk of the Bank is assessed by international credit assessment agencies such as Moody's Investors Services and Fitch Ratings, and ranked based on specific indicators adopted by each agency. For further details on the interpretation and methodology used by each agency you may refer, inter alia, to the websites of the above agencies. Moody's Investor Services Inc and Fitch Ratings Ltd, international credit assessment, research and business risk analysis agencies, classify Hellenic Bank with respect to its long-term credit rating at Caa3 (with negative outlook) and RD respectively. It is clarified that both agencies have been registered under the EU Regulation on Credit Rating Agencies. The table below presents the most recent credit ratings of the Bank, in accordance with the international agencies Moody's (16 April 2013) and Fitch (23 April 2013). Rating agencies and credit ratings Moody s Investor Services Inc (last assessment date 16 April 2013) Outlook Deposit ratings Bank Financial Strength Rating/Standalone BFSR Credit rating Negative Caa3 ca/e Fitch Ratings Ltd (last assessment date 23 April 2013) Outlook - Long-term issuer default rating RD Short-term issuer default rating RD Viability rating f The long term rating refers to the ability of a company to repay its long-term debt and is evaluated using ratings from Aaa to C. Moody's Investor Services Inc also uses a combination of indicators with numerical indexes (1, 2, 3), while Fitch Ratings Ltd combines the ratings with a positive or negative sign. Credit ratings assist investors in their assessment of the degree of the investment risk of a firm. The interpretation of the above rates according to Moody s Investor Services Inc is as follows: Caa: Obligations rated Caa are judged to be of poor standing and are subject to very high credit risk. Note: Moody's appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category. E: Banks rated E display very modest intrinsic financial strength, with a higher likelihood of periodic outside support or an eventual need for outside assistance. Such institutions may be limited by one or more of the following factors: a weak and limited business franchise; Financial fundamentals that are materially deficient in one or more respects; or a highly unpredictable or unstable operating environment. Note: Where appropriate, a "+" modifier will be appended to ratings below the "A" category and a "-" modifier will be appended to ratings above the "E" category to distinguish those banks that fall in the higher and lower ends, respectively, of the generic rating category.