Banks’ share increases spare them from Eurolife, Ethniki sale

By Evgenia Tzortzi

The successful share capital increase of Eurobank and the forthcoming one of National are changing the lenders’ plans for the sale of EFG Eurolife and Ethniki Insurance respectively.

Both groups have reportedly decided to hold on to their insurance subsidiaries for the time being, with the next decision to be made this fall after the publication of the stress tests by the European Central Bank that will determine what capital requirements the credit sector may still have.

Both National and Eurobank appear to have secured a grace period for the sale of their insurance subsidiaries. The management of National appears to have ensured the exception of the sale of Ethniki Insurance from the restructuring plan it has submitted to the Bank of Greece following negotiations with competition authorities in Brussels. The view that Ethniki is a crucial arm of the NBG group has gained ground and the insurer has returned to profits, while its sale would not have brought any notable revenues to the parent group. Moreover, changes to the social security system expected in fall are certain to lead to developments in the Greek insurance sector.

Almost the same arguments were used to avert the sale of Eurolife by Eurobank. The insurer has high profits and has consistently bolstered the group’s results since it was founded. The attraction of strong investors to the Eurobank share capital increase is seen to be shielding the insurance company and new stakeholders will have every reason to keep Eurolife in the group given its contribution to earnings.

Therefore, the plan for the sale of the insurance arms of major bank groups is for now restricted to the sale of the former ATEbank subsidiary, Agrotiki Insurance, which forms part of the Piraeus Group. Its sale is expected to be concluded by the end of this month. Piraeus intends on staying in the insurance market only through its holding in listed European Reliance, and has already reached exclusive agreements for the sale of life and general insurance products with Dutch ING and Germany’s Ergo.