17/09/2015 10:30
The subsidiaries of Greek banks are waiting for developments in Greece in order to assess the situation and proceed to actions that will determine the final form of their presence in Cyprus.
As attention focuses on Greek elections on Sunday, bankers are processing scenarios for the next day, mainly in connection with the recapitalization process of their parent companies.
Bank’s leaders do not hide their anxiety in relation to the smooth financing of Greece, as the first tranche of € 10 bn planned for the recapitalization of banks is subject to covering the large volume of prerequisites set for Greek authorities by international creditors.
The credit line approved in July can reach up to € 25 bn although most scenarios refer to lower capital needs.
The agreement of the Bank of Greece with the ECB is to complete the recapitalization in 2015. However, the process of assessing their capital needs has already caused warnings of international investors, who will lose their initial capital.
Given this uncertainty, Greek banks are moving towards selling affiliates to raise capital.
Piraeus Bank has already sold a 98.5% stake in Piraeus Bank Egypt last May, to a bank in Kuwait.
Similar moves are expected for other subsidiaries, particularly in the Balkans.
Subsidiaries in Cyprus
In relation with the Cypriot subsidiaries, the level of mobilization of banks varies depending on the intentions of the parent bank.
Piraeus Bank seems to stand most ready for a substantial change in its shape in Cyprus, as there is interest from the foreign group Libra.
Initial information was published by Phileleftheros newspaper and Piraeus Bank did not deny it.
Information indicates that a due diligence process has been in progress during the last few weeks, with the participation of an international audit firm located in Cyprus with technocrats of prospective buyers.
Libra Group was founded in 2003 and is owned by a Greek American family. It is an extension of the shipping company Lomar Shipping. Libra has 30 subsidiaries under its umbrella.
At Eurobank various scenarios have been processed, but right now, as stated by a senior executive, "there is no proposal for acquisition".
Eurobank, as he said, could be attractive for a number of investors as the bank has excellent fundamentals.
A similar situation seems to prevail in Alpha Bank. A senior official of Alpha Bank states that no process for a takeover of the Cyprus subsidiary is in progress.
Subsidiaries of the four systemic Greek banks (including the National Bank) in Cyprus employ around 1700 people.
Based on the latest available figures they hold approximately 15% of deposits and 10% of loans in the system.
W. Ross in the background
Their future presence will be determined, partly, from informal negotiations and reactions of international investors to the proposed, by international creditors, procedures for the recapitalization of Greek parent banks.
Wilbur Ross, a major shareholder of Eurobank and Bank of Cyprus, appealed to the ECB, according to Greek media, not to proceed immediately to a large recapitalization of Greek banks that would dilute the participation of international investors.
Mr. Ross argues that a severe dilution of the current shareholders of Greek banks due to recapitalization is not the way to restore market confidence towards Greece.
Mr. Ross, who led a group of investors who had invested €1,3 bn in Eurobank last year, warns that it will take too long before foreign investors return to Greece, if their investment in Greek banks is essentially lost.
Cypriot banks sold their branches in Greece in March 2013. Although since then there have been many discussions on the valuation of the lending portfolio of Cypriot banks in Greece, Piraeus Bank which acquired the loans, has already been recapitalized once and is heading towards a second recapitalization.
As attention focuses on Greek elections on Sunday, bankers are processing scenarios for the next day, mainly in connection with the recapitalization process of their parent companies.
Bank’s leaders do not hide their anxiety in relation to the smooth financing of Greece, as the first tranche of € 10 bn planned for the recapitalization of banks is subject to covering the large volume of prerequisites set for Greek authorities by international creditors.
The credit line approved in July can reach up to € 25 bn although most scenarios refer to lower capital needs.
The agreement of the Bank of Greece with the ECB is to complete the recapitalization in 2015. However, the process of assessing their capital needs has already caused warnings of international investors, who will lose their initial capital.
Given this uncertainty, Greek banks are moving towards selling affiliates to raise capital.
Piraeus Bank has already sold a 98.5% stake in Piraeus Bank Egypt last May, to a bank in Kuwait.
Similar moves are expected for other subsidiaries, particularly in the Balkans.
Subsidiaries in Cyprus
In relation with the Cypriot subsidiaries, the level of mobilization of banks varies depending on the intentions of the parent bank.
Piraeus Bank seems to stand most ready for a substantial change in its shape in Cyprus, as there is interest from the foreign group Libra.
Initial information was published by Phileleftheros newspaper and Piraeus Bank did not deny it.
Information indicates that a due diligence process has been in progress during the last few weeks, with the participation of an international audit firm located in Cyprus with technocrats of prospective buyers.
Libra Group was founded in 2003 and is owned by a Greek American family. It is an extension of the shipping company Lomar Shipping. Libra has 30 subsidiaries under its umbrella.
At Eurobank various scenarios have been processed, but right now, as stated by a senior executive, "there is no proposal for acquisition".
Eurobank, as he said, could be attractive for a number of investors as the bank has excellent fundamentals.
A similar situation seems to prevail in Alpha Bank. A senior official of Alpha Bank states that no process for a takeover of the Cyprus subsidiary is in progress.
Subsidiaries of the four systemic Greek banks (including the National Bank) in Cyprus employ around 1700 people.
Based on the latest available figures they hold approximately 15% of deposits and 10% of loans in the system.
W. Ross in the background
Their future presence will be determined, partly, from informal negotiations and reactions of international investors to the proposed, by international creditors, procedures for the recapitalization of Greek parent banks.
Wilbur Ross, a major shareholder of Eurobank and Bank of Cyprus, appealed to the ECB, according to Greek media, not to proceed immediately to a large recapitalization of Greek banks that would dilute the participation of international investors.
Mr. Ross argues that a severe dilution of the current shareholders of Greek banks due to recapitalization is not the way to restore market confidence towards Greece.
Mr. Ross, who led a group of investors who had invested €1,3 bn in Eurobank last year, warns that it will take too long before foreign investors return to Greece, if their investment in Greek banks is essentially lost.
Cypriot banks sold their branches in Greece in March 2013. Although since then there have been many discussions on the valuation of the lending portfolio of Cypriot banks in Greece, Piraeus Bank which acquired the loans, has already been recapitalized once and is heading towards a second recapitalization.
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