Tweet

Email

The shareholders of the Hellenic Bank approved Wednesday an equity capital increase of €150 mn required to complete the acquisition of Co-op bank assets.

Chairman of the Board of Directors Yussef Nasr told the shareholders that the agreement for the acquisition would strengthen the Hellenic Bank in order to be in a position to contribute to the country’s economic growth and stability.

The Bank’s CEO, Ioannis Matsis, identified two risks posed by the acquisition, the first one being the Bank’s exposure to Cyprus government bonds and the second, the integration with the Co-op.

The Hellenic Bank and the Cyprus Cooperative Bank (CCB) reached a business transfer agreement last June, based on which the first would acquire a total balance sheet of €10.3bn of assets. The balance sheet comprises of a portfolio of primarily performing loans (net loans of €4.6bn), Cyprus Government Bonds (€4.1bn), cash (€1.6bn), customer deposits (€9.7bn) and certain other current liabilities and assets. The Hellenic Bank has agreed to pay CCB €74mn in cash.

Source: Stockwatch

The acquisition creates a "healthy, profitable and sustainable bank", Matsis told the press, noting that the Hellenic Bank would be established as “the leading retail and SME bank in Cyprus”.

According to the CEO, the Hellenic Bank would return to profitability in the medium -term.

He said that through the acquisition the Bank’s assets would grow by 10 billion euro or 150%, that is two and a half times its size.

Figures he presented showed that the total assets would rise from 6,7 billion euro to 16,8 billion euro. Total loans and low-risk loans (guaranteed by the state) would increase from 1,95 billion euro to 6,27 billion euro or from 29.1% to 37.2% of total assets. Non-performing loans are expected to drop from 12.1% to 4.8% of the Bank’s total assets.

The Bank is also expected to have a performing loan market share of 22% and a customer deposit market share of 32%.
Its Common Equity Tier 1 (CET1) ratio is expected to rise from 12.9% to 14% and its capital adequacy ratio from 16.7% to 17%.

The Bank’s CEO identified two risks posed by the transaction for the Hellenic Bank. He said the first one was its exposure to Cyprus government bonds and loans, accounting for 29% of its total assets. The second risk, he explained, was the integration procedure that would take 15 months to be completed. The Bank has already formed an Integration Committee to ensure the effective oversight and input of the Board of Directors in smoothly implementing the integration plan relating to the acquisition, said Matsis.

In the framework of the agreement, up to 1,100 Co-op employees could be transferred to the Hellenic Bank and around 100 branches would close down, while 125 branches would remain open.

Furthermore, the Bank’s clients are expected to increase from 260,000 to 556,000.

Matsis noted that the terms of the loans that will be transferred from the Co-op to the Hellenic Bank would not change. But added that deposit rates could be adjusted, upon maturity date.