THE predicted next bout in the battle of the banks materialised yesterday, with the Marfin group outbidding archrivals Bank of Cyprus for the acquisition of a coveted investment fund.
Bank of Cyprus had tendered to buy out CyTrustees, a closed-end investment fund firm, offering 2.10 euros per share. The initial response from the target firm was negative, with its board of directors releasing a statement noting that BoC was undervaluing it. The BoC came back with a revised offer of 2.25 euros per share.
That was when Marfin jumped on the bandwagon, bettering BoC’s offer at 2.40 euros. The actual bid was launched by Laiki Investments, the investments branch of Marfin.
“I think what we’re seeing is a tit-for-tat between the two giants, who are locking horns wherever they get the chance,” said economic analyst Stelios Platis.
“It’s getting personal now, and it’s getting rough,” he added.
Last week, Marfin suffered a setback, when its bid for the BoC and Greece’s Piraeus was thrown out by the Cyprus bourse.
Given that Piraeus’ bid for Marfin had come first, the Cyprus Stock Exchange reasoned that Marfin’s tender for Piraeus and the BoC would hinder that process.
Regulations governing mergers and acquisitions state that a company launching a public offer cannot at the same time be a buy-out target.
The three-way combination of Marfin, BoC and Piraeus would have created Greece’s largest bank, with more than 1,000 branches. Assuming the deal went through, Marfin would control more than 55 per cent of the Cyprus banking market – raising central bank concerns on healthy competition in the banking sector.
The bourse’s decision has apparently caused a change of tactics by Greek financier Andreas Vgenopoulos, Marfin’s CEO.
On Thursday, it was announced that Marfin had sold its share in Hellenic, currently the island’s third largest lender, to the Archbishopric.
The transaction, which netted Marfin a £35.9 million profit, now gives the Church a controlling stake in Hellenic of around 25 per cent.
And there are reports that Marfin will be moving in on the lucrative health care industry by buying a stake in private clinics.
The Church also owns around four per cent of BoC shares, although Archbishop Chrysostomos said yesterday they were interested in increasing their stake.
Chrysostomos explained that the Church was motivated by a desire to “protect the interests of the country, so that our banks are not ransacked by foreign concerns”.
But analysts agree that Marfin never had a strategic interest in Hellenic in the first place. Its ultimate target is the Bank of Cyprus, they say.
Nevertheless, the deal has also probably gained Vgenopoulos a useful ally in the Archbishop, who has been taking a very active involvement in public affairs.
“In my view, it’s not even about the BoC per se,” Platis told the Mail.
“Vgenopoulos is primarily interested in the BoC’s assets abroad. I don’t believe he is losing sleep over the Cyprus market. He’s eyeing the faster-growing markets in Greece, the Balkans and Russia. The BoC’s operations in Russia would give him access there.”
Meanwhile, the Commission for the Protection of Commission (CPC), a non-governmental agency, has asked the Archbishopric for details on the Hellenic deal.
CPC chairman Giorgos Christofides told the Mail yesterday that the agency wanted to ensure that, since the Church now had a controlling stake in Hellenic, this did not violate anti-concentration laws.
“It is not an investigation yet,” Christofides said.
There is also the question of whether the Church should have secured permission from the Central Bank before gaining a 25 per cent stake in a public corporation.
