FINANCE Minister Michalis Sarris yesterday voiced reservations over Marfin’s takeover bid for the Bank of Cyprus, the outcome of which many predict will be decided on the political level rather on purely economic criteria.
The Marfin bid, coupled with a separate offer to Greece’s Piraeus Bank, is under regulators’ scrutiny on whether it was a defensive move to ward off becoming a takeover target.
The proposed new three-way combination of MPB, Piraeus and the BoC would create a market leader in Greece and among the top 25 banks in Europe, boasting some 1,000 branches in 17 countries, total assets worth 97 billion euros and a credit of 54 billion euros.
Mounted on Monday, the bids came hours after rival Piraeus launched a tender to buy at least 40 per cent of Marfin.
With Marfin being 15-per cent owned by Dubai Financial, already local officials have been stressing the need to maintain a strong Cypriot-owned bank. BoC have also highlighted that their board is composed only of Cypriots.
Sarris himself was more pragmatic, alluding to the fact that the Cypriot banking market was not ready for a merger of its two largest credit institutions.
“Under normal circumstances, [Marfin’s] move should have been a welcome development. But this is a particular case. The situation is perhaps not ripe for this. It has investors, shareholders and even consumers confused, creating uncertainty.”
However, Sarris steered clear of the argument heard in political circles, namely, that it would be better to keep Cyprus’ largest lender out of foreign hands. Pre-war debt to commercial banks, yet to be fully recouped, is still a regular issue in parliamentary debates.
The other notable intervention came from Archbishop Chrysostomos II, who said the bulwarks of the Cypriot economy should stay in local ownership.
The extremely wealthy Archbishopric is the main shareholder in Hellenic, the third largest bank in the country.
“The Church shall ensure that Cypriot banks are not sacked by foreigners,” Chrysostomos declared.
To this end, he added, the Archbishopric would be buying “a share package” in the BoC and would also be increasing its stake in Hellenic.
Laiki has an 8 per cent stake in Hellenic.
Chrysostomos revealed that, during his brief meeting with Marfin CEO Andreas Vgenopoulos on Monday, he asked the Greek financier to “deal only with Laiki [Popular Bank] and leave the other banks alone.”
The Primate also threw in a bit of politics into the equation.
“As long as the Cyprus problem is unsolved, it would be better for the Bank of Cyprus and Hellenic to maintain their ownership status,” he noted.
Meanwhile the top execs of the two rival banks continued trading barbs.
Charilaos Stavrakis, the deputy CEO of the Bank of Cyprus, repeated their rejection of Marfin Popular’s bid, calling it “not serious” and totally unacceptable.
“First of all, we reject the offer because control of the new group would come under foreigners. Second, there is no business plan for the proposed merger. International banking practice dictates that before you embark on such an ambitious project, you need to have prepared impeccably beforehand.
“In our humble opinion, when you merge two of the largest banks, in order to create synergies you’ll need to fire a lot of people. After all, around 70 per cent of bank costs go to the payroll. We believe that many branches will be shut down, hundreds of jobs will be lost,” he added.
Stavrakis also played the patriotic card, saying: “Let’s be frank, Marfin is only a Cypriot business by name. The reality is that it is controlled by foreign interests.”
The response came immediately from his Marfin counterpart, Christos Stylianides
“That is nonsense. Marfin is in Greek and Cypriot hands – very friendly hands I might add. And it is precisely if we do not forge alliances with Greek business today, that tomorrow we may find our banks pass under foreign control.”
And as for any plans by Dubai Financial to raise its stake in Marfin to 20 per cent, this would first require the approval of the Central Bank, added Stylianides.
He also sought to reassure bank employees that no jobs were on the line. He vowed that, unless ETYK – the blanket bank employees union – approved of their plans, Marfin would simply not go ahead with deal.
For his part, ETYK general secretary Loizos Hadjicostis said the union would be satisfied only if Marfin’s leaders put their signature on a document affirming that no one would be sacked.
Under Greek strongman Andreas Vgenopoulos, Marfin Popular Bank has been at pains to show it is doing everything by the book. Its takeover bid is being eyeballed not only by the Securities and Exchange Commission, but also by the competition watchdog.
The combined turnover of Marfin and the BoC would amount to more than 50 per cent of the banking sector, leading to fears of a monopoly.
Marfin says the greater mass will allow for reduced costs and, ultimately, better-priced products for customers.
The market yesterday reacted much as expected, with the bid for BoC producing a marginal increase (0.7 per cent) in the bank’s share value on the Cyprus Stock Exchange. Marfin’s stock took a slight hit both in the Nicosia and Athens bourses.
