THE BANK of Cyprus (BoC) has dismissed out of hand a friendly offer for cooperation from arch-rivals Marfin Popular Bank, setting the stage for a battle for the minds and hearts of shareholders.
Earlier in the week, Marfin said it would appeal directly to the BoC’s shareholders for a proposed strategic agreement between the two banks that would evolve into a fully-fledged merger, but only in the distant future.
Marfin Popular Bank is the single largest shareholder in Bank of Cyprus with an 8.31 per cent stake.
No sooner had Marfin made the proposal than the BoC released a statement, in which it “categorically rejected” it.
“The prospect for cooperation with Marfin Popular Bank is not to the benefit of the shareholders, clients and employees,” the BoC said defiantly.
“As such, the Bank of Cyprus Group will not jeopardise our three-year growth plan,” the statement added.
BoC has so far doggedly resisted any proposals for cooperation, maintaining its long-standing policy of autonomous development.
It has dismissed prior overtures from Marfin as hostile, suggesting that MPB is interested only in growth by acquisition.
Monday’s move by Marfin was seen as a way of bypassing the BoC’s directors.
Marfin wants the BoC’s next Annual General Assembly (AGM) to include on its agenda a motion for discussions between the two giants on possible cooperation.
The AGM is scheduled for June 6.
Marfin has more than the required five per cent stake in the BoC to raise issues at the latter’s AGM.
According to Marfin, a union of the two banks would create a “national champion” in Cyprus, the second largest bank in Greece and a major player in southeast Europe.
That has raised monopoly concerns, while already the local competition watchdog is looking into Marfin’s acquisition of eight per cent in the BoC.
Analysts agree that the new battleground will be on the plains of the BoC shareholders, with each bank trying to win them over.
“Vgenopoulos is going for the friendly approach, and that seems to be the right strategy for now. Obviously, if he’s unable to convince the BoC shareholders, he’ll have to buy them out,” said economist Dr Stelios Platis.
“Vgenopoulos has a significant advantage in the PR game as he has the eight per cent stake. However, it is highly likely that his effective control on the BoC is greater than his nominal shareholding.
“On the other hand, the alliances being forged in the [BoC] management camp cannot be underestimated,” Platis told the Mail.
“Each side has its assets. The Bank of Cyprus leaders have nurtured personal relations with their stockholders. Vgenopoulos, on the other hand, possesses superior communication and marketing skills. He’s better at selling something.”
With a reputation of growth by acquisition, MPB currently has a little under 400 branches in 13 countries, especially following the recent buyout of the Ukraine’s Marine Transport Bank MTB.
For its part, the Bank of Cyprus relies on consolidating its local operations and expanding into the Russian market.
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