Hellenic Bank in “advanced talks” over a possible acquisition of Pireaus Bank Cyprus

Hellenic Bank in “advanced talks” over a possible acquisition of Pireaus Bank Cyprus

Hellenic Bank is in talks with Greek Pireaus bank over a possible acquisition its subsidiary in Cyprus, Pireaus Bank Cyprus.

Sources told CNA that the talks are in an advanced stage, as Hellenic Bank officials along with technical advisors have been carrying out a due diligence check in Pireaus Cyprus since last Sunday.

Confirming the due diligence exercise, banking sources however pointed out that this “does not necessarily mean we are close to a deal.”

The scenarios for the acquisition of the four Greek subsidiaries operating in Cyprus have been on the table before the Greek crisis emerged. However the uncertainty over a new Greek financial bailout and a possible exit of Greece from the Euro area resulted in capital controls that exacerbated the situation in the Greek banking system which in turn gave the deliberations a new impetus.

According to the same sources, the scenarios include the acquisition all four Greek subsidiary banks operating in Cyprus with Hellenic Bank owing to its ample liquidity being in a position to carry out these acquisitions, if deliberations progress and if the supervising authorities give their approval.

At the same time these deliberations are closely monitored by the European Commission Directorate General on Competition while Cyprus` creditors, (the EC, the ECB and the IMF) are aware of the developments.

Banking sources believe that such developments would contribute to the further stabilization of Cyprus` banking sector through the creation of a third pillar, a credit institution with no state intervention and no reliance on ECB liquidity funding.

Cyprus, in a bid to avert the collapse of its banking sector, concluded to its own bailout with the EU and the IMF on March 2013. The €10 billion bailout featured a conversion of 47.5% of deposits over €100,000 into equity in Bank of Cyprus, the island`s largest lender, whereas Cyprus Popular Bank went in liquidation with part of its assets being absorbed by Bank of Cyprus. Furthermore, the Cypriot banks were forced to sell their branches in Greece to Pireaus Bank. Hellenic Bank was the only Cypriot credit institutions that emerged the financial meltdown unscathed as it secured covered its capital needs raising capital from the private sector.