THE banking world in Greece and Cyprus was turned on its head yesterday as Piraeus Bank and Marfin Popular Bank (MPB) launched rival bids to buy each other out, with Bank of Cyprus stuck in the middle.
Bank of Cyprus was drawn into the financial morass as Marfin tried to buy out Cyprus’ largest lender, prompting both the Athens and Cyprus stock exchanges to suspend trading for all concerned.
MPB announced early yesterday it would make a public offer to buy rival Piraeus Bank and the Bank of Cyprus, a day after Piraeus launched a bid for Marfin.
Late on Thursday Piraeus had launched a tender to buy 40 to 100 per cent of Marfin Popular, in what market watchers said was a defensive, pre-emptive move to block an imminent bid by Marfin for Piraeus and the Bank of Cyprus, which is about 10 per cent owned by Piraeus Bank.
Under Greek legislation, a company launching a public offer cannot at the same time be a buy-out target.
The Athens stock exchange temporarily suspended trade on shares of the banks, saying it wanted to give investors more time to digest the fast-breaking news. The Cyprus Stock Exchange made a similar move.
In a statement issued yesterday, Piraeus Bank said its tender for Marfin Popular (MPB), announced to relevant authorities and Marfin Popular’s board, effectively blocked MPB from launching a counter offer for Piraeus.
The Bank said that the decision of its Board of Directors to make an official and binding public offer to the shareholders of MPB had been announced on Thursday in writing to the relevant authorities, following the necessary procedures.
But Marfin proceeded yesterday with its own public offer to buy Piraeus Bank and the Bank of Cyprus.
“Our proposals will be submitted today as planned… and shareholders of the respective lenders will have the opportunity to examine carefully if their acceptance will add value to their investments,” Marfin said.
It said Piraeus Bank’s move to obstruct its bid should not be successful.
“The effort of Piraeus Bank’s management to obstruct or guide the judgement of shareholders and the market cannot be successful,” said Marfin, which has a market value of 6.9 billion euros. “Piraeus’ offer was issued without having previously informed nor obtained the necessary approval by the relevant regulatory authorities.”
MPB said it was offering 1.241 of its shares for every Bank of Cyprus share, seeking to acquire a minimum 35 per cent stake in the Cypriot bank.
The exact terms of its offer for Piraeus Bank have not been made public yet.
But yesterday afternoon the board of the Bank of Cyprus rejected the bid by Marfin. “BoC’s board considered that the intention of Marfin Popular lacks seriousness. It comes from an organisation that resulted from the merger of three financial institutions, the activities of which have not yet been operationally merged,” the board said in a statement.
According to reports from financial media in Greece, MPB CEO Andreas Vgenopoulos accused Piraeus Chairman Michalis Salas of abusing inside information in announcing the counter-bid.
The reports said that Marfin executives had as a matter of courtesy informed the top Management and Board of Piraeus of their intentions.
Late on Thursday night, Piraeus Bank launched a “friendly” takeover bid seeking control of Marfin, which analysts saw as a desperate move to halt Marfin’s ambitious plans.
Marfin, with a market capitalisation of $8.9 billion, was formed in a triple merger of Marfin, Egnatia Bank and Cyprus Laiki Bank late last year.
The latest three-way combination proposed by Marfin would create Greece’s biggest bank, with more than 1,000 branches.
Piraeus Bank had been pursuing a tie-up with the Bank of Cyprus but its cash and stock offer was rejected by BoC’s board recently. Piraeus has since said it would not improve its offer. It has said it will liquidate its 10 per cent holding in BoC to lock in capital gains.
Finance Michalis Sarris said yesterday the Cyprus economy could withstand any problems that might occur as a result of the developments.
He said the government was monitoring developments and it would look into the issue with the necessary seriousness and objectivity.
“I believe that Cyprus’ financial scene will change to a great extent. What interests us is that competition is not limited”, he said.
The Cyprus Central Bank said it would evaluate Marfin Popular’s bid for BoC on the basis of national law and European Union regulations.
Deciding whether Piraeus’s offer effectively blocked Marfin’s counterbid was up to the securities regulators, it said.
“I expect that the relevant authorities will decide the soonest within 24, 48 hours, which is the legally valid decision so this situation can revert back to normal,” Central Bank Governor Christodoulos Christodoulou told reporters.
Greece’s Central Bank, yesterday called on lenders pursuing mergers and acquisitions to refrain from making statements that could confuse the public and damage the sectors reputation.
“Following recent developments in the banking sector regarding the successive placement of public offers for the control of lenders… the banks should avoid statements that create confusion,” the regulator said in a statement.
