GREECE’S Piraeus bank has put the squeeze on the Bank of Cyprus (BoC), who has until the middle of the month to make up its mind on whether it genuinely wants collaboration.
Piraeus holds around 10 per cent of BoC shares, acquired gradually since the beginning of the year. A merger of the two organisations would most likely create the largest banking outfit on the island, besting the Popular Bank-Marfin combination.
The merger last month of Marfin Financial Services with the Popular Bank brought home the reality of the changing environment. By the end of the year, it is said the new combined group will have 22.3 billion euros in assets, 300 branches and a presence in 13 countries.
In terms of market capitalisation, the new group would become the largest bank on the island and also the fifth largest corporation listed on the Athens Stock Exchange.
Apart from sheer size, there are other things at stake – namely more penetration abroad. Analysts agree that growth in the saturated Cypriot market is extremely limited, so the next logical step for local players is to tap into the Balkans.
According to reports, a few days ago the chairman of Piraeus, Michalis Sallas, addressed a letter to the BoC board, asking them to decide on the marriage. Sallas wants a meeting of top execs from the two banks to seal the deal, although the venue – Athens or Nicosia – is yet to be determined.
Putting the heat on the dithering board of the Cypriot bank, Sallas has reportedly conveyed the message that Piraeus will not wait around forever.
And in a carrot-and-stick approach, he has hinted that if the BoC doesn’t go for the deal then Piraeus will sell off all its stock – a move that would make BoC share prices tumble.
Right now, the value of Piraeus’ stake is estimated at £100 million.
The same reports said that tomorrow the BoC board will be having a powwow to look in detail at the prospects of cooperation. It is thought the board is divided; some members are all for a merger, while others – perhaps fearful for their positions – are not as keen.
Yiannis Kypri, Group Chief General Manager for the BoC, yesterday declined to comment on any of the above.
“Our policy is not to comment on speculation. When there is something to say, we will say it,” he told the Mail.
The rocky relationship with Piraeus began some six months ago, when the Greek lender acquired two per cent of BoC shares, slowly increasing this to a little over eight per cent in mid-October.
As Piraeus’ stake grew, the Cypriot bank’s initial warm response cooled off, to the point where bank execs began suggesting the Greeks were out to make a hostile takeover.
Even the Central Bank director intervened, siding with the local concern, as commentators feared that the island’s largest lender might pass into foreign hands.
Then came the debacle with Greece’s Emporiki Bank. In what was seen as a defence mechanism, the BoC made a bid for Emporiki only to abandon it shortly thereafter, incurring the wrath of the Greek government.
Even though Greece’s securities watchdog rejected BoC’s request to withdraw its bid, leaving it technically in force, Greece’s Finance Ministry said it was no longer taking it seriously, tilting towards an all-cash offer from Credit Agricole.
Later in July the Cyprus Central Bank seemed to throw the BoC a lifeline by rejecting the latter’s tender offer to take over Emporiki.
??
??
??
??
