MARFIN group’s leaders yesterday dismissed speculation they were bent on growing by swallowing up other businesses, saying their mission was to create jobs and boost the Cypriot economy.
“We like to think big, and are people who keep an open mind,” said group chairman Saoud Balawy.
“We believe in the development and the opportunities afforded by the Cypriot economy.”
He was commenting on news that Marfin Popular Bank (MPB) was moving into areas outside banking, in particular the hotel sector and the health care industry.
Balawy, on his first visit to the island, is the leader of Dubai Financial Services, an investment fund that now owns 31.5 per cent of MPB.
He was flanked by the group’s CEO and high-flying Greek financier Andreas Vgenopoulos, and MPB’s deputy CEO Christos Stylianides.
Earlier this week, Marfin announced it had purchased a 57 per cent stake of the Cyprus Tourist Development Company in the Hilton hotel.
The hotel was previously owned and controlled by the Louis Group, which will maintain a 20 per cent stake and voting rights in the board of directors.
Marfin forked out £30 million for the deal, paying £17.61 per share of the hotel; back in 2000, Louis had purchased Hilton shares at a considerably lower price of £9.20.
Moreover, there are reports that Marfin is planning to follow-up with more acquisitions of five-star hotels owned by Louis. An announcement released yesterday described the Hilton deal as a “first step in the cooperation between the two groups.”
Other reports – as yet unconfirmed – say Marfin is looking to acquire a controlling interest in at least two private clinics on the island – the Aretaion health care centre in Nicosia and the Ygeia polyclinic in Limassol.
Cyprus’ strategic location – “a gateway to Europe” – the high level of its services and the work ethic of the people were the main reasons why Dubai Financial was attracted to the island, Balawy said.
And Vgenopoulos addressed local concerns that Cyprus’ second largest lender was now in foreign hands.
“How do you define the ownership of a bank anyway?” he mused.
“Our projected high growth will create jobs and boost the economy. It is high time we left behind this misery, this fear of foreign investment. How else can Cyprus become a regional leader?”
Marfin yesterday also announced a 60 per cent dividend payout ratio for shareholders.
Last month, Marfin suffered a setback, when the Cyprus Stock Exchange threw out its takeover bid for the Bank of Cyprus, saying it was in contravention of stock market procedure, and gave the nod to Piraeus’ rival offer for Marfin.
Given that Piraeus’ bid for Marfin had come first, the CSE reasoned that Marfin’s tender for Piraeus and the BoC would hinder that process.
The relevant clause on mergers and acquisitions states that a company launching a public bid cannot at the same time be a buy-out target.
Marfin’s main shareholders, including Dubai Financial, have rejected Piraeus’ takeover bid.
Asked whether he might consider a better offer from Piraeus, Balawy was categorical:
“I am here to build a business, not to sell it,” he said.
Earlier in the day, Balawy met President Tassos Papadopoulos, governor of the Central Bank Christodoulos Christodoulou and Archbishop Chrysostomos.
The Church recently became the majority shareholder in Hellenic Bank when it acquired Marfin’s stake there.
But questions still hover about the true motives behind Marfin’s inroads into the hotel sector.
It is generally acknowledged hotels are far from a booming business, something which even the hoteliers association conceded recently.
“The hotel business has a low return, so it remains to be seen whether the logic behind this move was sound,” commented economist Dr. Stelios Platis.
There was also the matter of banking regulations, which place limitations on how many shares of a non-banking corporation a bank may acquire.
The law states that banks may not acquire – directly or indirectly – more than 10 per cent of a non-banking concern.
However, the same law states that this is possible with permission from the Central Bank.
During the weekend, statements released by the Louis group clearly indicated that they were in negotiations with Marfin.
But yesterday Marfin changed its tune, saying that the purchase of shares in Hilton was carried out not by the bank, but one of its subsidiaries, the Investment Bank of Greece.
Platis explained the reasoning behind the limitation. “The Central Bank wants to ensure that banks have the capital adequacy to protect their depositors. Investing in other areas entails a great deal of risk.”
