Piraeus-MIG tie-up to lead to restructurings

By Yiannis Papadoyiannis

Market experts expect the deal announced last week between the Piraeus Group and Marfin Investment Group to develop into a broader cooperation toward the merging of enterprises, aimed at creating stronger and more competitive firms.

Although Piraeus Bank states that no such planning or decision has been made, analysts point to the fact that both groups control a number of enterprises in sectors such as coastal shipping, health, food and information technology, among others.

Having absorbed as many as six banks in recent months, Piraeus now finds itself either a stakeholder or the main creditor of dozens of enterprises in various economic sectors that have run into problems due to the financial crisis.

For instance, in coastal shipping, Piraeus is the biggest creditor of ANEK, whose bank obligations amount to 400 million euros. In health, Piraeus is the main creditor of the Henry Dunant Hospital, through the former ATEbank, while it now also holds stakes in a number of dairy companies and cooperatives. In addition, the lender is among the main creditors of companies in the sectors of fish farming, information technology and tourism.

MIG controls 92 percent of food and dairy industry Vivartia, 89 percent of coastal shipping firm Attica, 70 percent of healthcare group Hygeia and 86 percent of IT company Singular Logic, to name but a few. Analysts say that ANEK, the Henry Dunant Hospital and other companies could join up with their MIG counterparts, thereby creating stronger and more competitive corporations. That way the Piraeus Group would resolve longstanding problems in its financial reports and reap capital gains as MIG’s main shareholder.

Nevertheless, Piraeus sources say that even though the group is going to play a decisive role in the restructuring of sectors and enterprises – with a special unit already set up within the bank to that end – Wednesday’s agreement for the acquisition of a 17.7 percent stake in MIG through convertible bonds should not be associated with this crucial strategy.

Bank of Greece Governor Giorgos Provopoulos has repeatedly called on commercial banks to take the initiative in terms of restructuring business forces. He has said that just as in the successful consolidation of the credit sector, banks should take a leading role in the restructuring of the economy’s other sectors. Provopoulos adds they ought to encourage business cooperations that will lead to stronger and more competitive units. He has also asked for banks to proceed to the targeted channeling of funding to healthy sectors and enterprises so as to support the economy’s new, outward-looking production model.