On 21 February 2003, the Bank of Cyprus Group announced the establishment of a Capital Securities Programme for a total amount of C£150 million (257 million euros). Series A of the Capital Securities was issued in February 2003 and amounted to C£65 million. The Bank informs the public that it intends to proceed with the issue of Series B of Capital Securities in Cyprus Pounds by way of a public offering in Cyprus for up to C£20 million (34 million euros), with an option to increase the amount.

The terms of issue of Series B of the Capital Securities include the following:

1.The Series B Capital Securities will bear a fixed rate of interest of 5,75% per annum. The interest will be payable every six months. The annualised yield of the Series B Capital Securities is in excess of 5,75% as a result of the bi-annual payment of interest.

2.The Series B Capital Securities constitute direct, unsecured and subordinated securities of the Bank. The rights and claims of the holders of Series B Capital Securities are subordinated to the claims of the creditors of the Bank, who are:

- depositors or other unsubordinated creditors of the Bank, and

- subordinated creditors, except those creditors whose claims rank pari passu with the claims of the holders of the Capital Securities (Series B).

The rights and claims of the holders of Series B Capital Securities have priority over the shareholders of the Bank.

The rights and claims of the holders of Series B Capital Securities rank pari passu with the rights and claims of the holders of the Series A Capital Securities.

3. The Series B Capital Securities have no maturity date. However, the Series B Capital Securities may be redeemed in whole at the option of the Bank, subject to the prior consent of the Central Bank of Cyprus, at their principal amount together with any outstanding interest payments, five years after their issue date or on any other interest payment date thereafter.

4.If the Bank, at its sole discretion, determines prior to any interest payment date that it is in non-compliance with the required capital adequacy as set by the Central Bank of Cyprus or the payment of interest will result in non-compliance with the required capital adequacy, then the Bank may elect to defer such interest payment, subject to the restrictions described below. Such deferred interest payment, shall be satisfied only on the date upon which the Series B Capital Securities are redeemed. No interest will accrue on a deferred interest payment.

If the Bank defers an interest payment for any reason then no dividend payment or any other payment will be permitted on the ordinary share capital or on other securities ranking pari passu or below the Series B Capital Securities of the Bank until the Bank next makes an interest payment on the Series B Capital Securities.

5. The investors will always receive interest payments made in respect of the Series B Capital Securities in cash. However, if the Bank defers an interest payment, then any such deferred interest payment must be financed by the proceeds of an issue by the Bank of ordinary shares.

For this purpose, the Bank will submit a Prospectus/Listing Particulars to the Cyprus Stock Exchange and the Securities and Exchange Commission (?Relevant Authorities?) for approval.

The final terms of issue of the Series B Capital Securities may be altered according to the market conditions prevailing at the time of the receipt of the necessary approvals by the Relevant Authorities in Cyprus in order to proceed with the public offering.

For further information, investors may contact the Company?s Registered Office, 51 Stassinos street, Ayia Paraskevi, Strovolos, Nicosia, tel. 22842100.