Eurobank announced on Thursday that it has expanded its interest in Hellenic Bank to 26% after reaching a deal to acquire a 13.4% investment currently held by video game business Wargaming, subject to regulatory approval.
Following the acquisition, Eurobank has become the main shareholder in Hellenic Bank, further expanding the bank's involvement in the Cypriot banking market. Eurobank also has a totally owned subsidiary on the island.
Eurobank controlled 12.6% of Hellenic Bank as of July 2021, and if the agreement reached with Wargaming to acquire the latter company's 13.5% stake is accepted by the supervisory authorities in Frankfurt, it will radically alter the landscape in the Cypriot bank's ownership structure.
According to media reports, the deal between Eurobank and Wargaming is subject to approval, which means that the supervisory authorities will look over the full agreement before accepting or rejecting it.
It should be emphasised that Hellenic Bank, Cyprus' second largest bank, is recognised as a systemic bank, which will definitely factor into any decision.
According to local sources, however, the chance of rejecting Eurobank's proposed share increase is remote, since Eurobank is likely to have already done its due diligence and studied the viability of such a move beforehand.
Furthermore, it has previously been noted that supervisory authorities in Frankfurt have not looked favourably on Wargaming's share in Hellenic Bank in the past, and there is a general inclination to favour financial institutions with deep knowledge of banking activities as major shareholders in banks.
In July 2021, the Eurobank Group purchased a 9.9 percent stake in Hellenic Bank, equating to 40,800,000 shares.
Shortly after, Eurobank boosted its share capital to 12.6% after reaching a deal with investment fund Third Point Hellenic Recovery Fund to acquire an additional 2.7% stake.
In relation to the aforementioned share increases, Eurobank's Chief Executive Officer, Fokion Karavias, previously indicated that “this is a move of strategic importance, as this major investment action by Eurobank will not be opportunistic, it will in fact have depth and continuity”.
Hellenic Bank, which is active in private and corporate banking as well as international banking, is linked with the group's strategy, according to Eurobank's management in Athens, as it strives to enhance its position in important areas in which it has a strategic interest.
According to media reports, the Eurobank Group believes Hellenic Bank, with its management, financial structure, and devoted customer base, is in a strong position to capitalise on market prospects and seize future chances.
Furthermore, this latest development is not expected to disturb Hellenic Bank's management or workforce, and the bank's present administrative structure is likely to remain unchanged.
Demetra Holdings, which was formerly the second largest stakeholder in Hellenic Bank, will now become the third largest shareholder with a 21.02 percent stake.
With 12.5%, investment fund Poppy Sarl is the third largest Hellenic Bank shareholder, followed by investment firm Senvest with 5.07%.
By fLEXI tEAM