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Fitch sees positively MPB-TPEIR merger

13/02/2007 15:14
International Credit Rating Firm, Fitch, sees positively a possible merger between Marfin Popular Bank and Piraeus Bank. In its latest report, Fitch analyst, Christina Torrela supports that “a merger between Marfin Popular Bank and Piraeus Bank would be positive for both banks involved as it would create one of the largest and most diversified banks in the region with significant market shares in both Greece and Cyprus. This is regardless of ultimate ownership of the merged bank”.

According to Director in Fitch's Financial Institution group, Paolo Fioretti, “Given the various uncertainties surrounding the mutual bids of the two banks, it is, however, difficult to predict if a merger will materialise and which bank would ultimately be the acquiring bank. We will take rating actions once the situation has been clarified and a likely outcome to the multiple bids emerges”.

MFG share capital increase

The report also refers to MPB’s decision to proceed to an increase in its share capital by €5 billion and the problems with the Public Offers submitted by Piraeus Bank for the acquisition of MPB and the PO of MPB for the acquisition of Bank of Cyprus and Piraeus Bank. “The Cyprus Stock Exchange finally decided that MPB's bids were invalid since MPB was already the target of Piraeus's bid at the time of its bid announcement and hence subject to the so-called passivity rule according to Cypriot legislation. MPB is unlikely to appeal this decision but it is possible for the bank to submit another bid for Piraeus once the bid period has expired”, it reported.

Successful Piraeus’ bid is limited

According to the analysts, “Piraeus's public offer which effectively values MPB at an around 40% discount of its current share price has according to MPB already been rejected by around 42% of its shareholders. Given this, Fitch considers the likelihood of a successful Piraeus's bid as limited in its current form. The bank can, however, improve its bid before the last week of the bid period beginning on 19 March 2007”.

Rating

Fitch gives MPB a BBB+ stable outlook and Piraeus Bank a BBB+ positive outlook.