An application for approval of the legal merger of Bank A with Bank B has been submitted to the Central Bank of Cyprus.
The legal merger will be completed in two steps, (i) the transfer of banking business of Bank B to Bank A via a transfer of business agreement, (ii) the merger of the two entities via a scheme of reorganisation. Following step (i) of the merger, Bank B will not maintain any activities or deposits and it will surrender its banking license. As such it will cease to be a credit institution and will temporarily obtain ~36% of Bank A through the transfer of business to Bank A (subject to regulatory approvals). The said legal merger is expected to be effective from 1 July 2025 onwards.
The first FINREP report that will be prepared for the “merged” entity will be for reference date 30/09/2025. Given the transaction described above, how should we approach the FINREP tables that show movements (i.e. tables F12.01, F12.02, F18.01, F24.01, F24.02, F25.01& F 25.03)? In our view, the possible options are as follows:
(i) Opening balances comprise of the sum of the opening balances of both entities (prior to the transaction) as at 01/01/2025. Additions/disposals/other movements during the reference period are again the sum of the additions/disposals/other movements of the two entities. As such the transfer of balances from Bank B to Bank A will not be explicitly shown.
(ii) Amounts transferred from Bank B to Bank A form part of the inflows/additions of the “merged” entity, meaning the opening balances on the movements tables present the figures as presented by Bank A in its current reporting.
(iii) Opening balances will be shown as nil and all will be shown as “Inflows”, as if a new entity is set up.
- Legal act: Regulation (EU) No 575/2013 (CRR)
- COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) 2024/3117 - ITS on supervisory reporting of institutions
