ECONOMY

Piraeus links up with ING; deal focuses on bancassurance

Two months after announcing its successful takeover of state-controlled ETBA Bank, Piraeus Bank, the fifth-largest banking group in Greece, said on Monday it had signed an agreement with Dutch banking and financial services group Internationale Nederlanden Groep (ING) paving the way for a series of joint ventures in bancassurance and insurance-related activities. The move underlines Piraeus’s aggressive strategy of expansion, a tactic which has taken on added urgency in view of the recent consolidation of the two largest banks in the country, National Bank and Alpha Bank, and the possibility of more mergers and takeovers on the way. Its decision to venture into the insurance sector comes as the government prepares to launch social security reforms which could open up the way for a greater private sector role. Talks between Piraeus and ING earlier in the year on the possibility of the latter becoming a strategic investor in the Greek bank fell through, leading the former to turn its attention to ETBA. The accord with the Dutch group foresees a share exchange between the bank and Nationale Nederlanden, ING’s Greek insurance subsidiary, following the integration of Piraeus and ETBA. Piraeus and ING said they plan to form joint ventures in bancassurance, employee benefits and asset management, with the Greek bank holding a controlling 50.1-percent stake in the operations. Products from the joint ventures will be branded ING Piraeus. The partners said their strategic alliance will boost [their] leading position in the Greek bancassurance market. Nationale Nederlanden currently holds a 14-percent share of the domestic life insurance market while Piraeus has an 8-percent share of the local banking industry. The two companies have a combined 8-percent share of the Greek asset management market. The two networks number some 300 outlets. Piraeus said it expects to unveil the organizational structure of the alliance with ING by January 31, 2002, with the proposals then forwarded to the regulatory authorities for approval. In October, the bank outbid state-controlled Agricultural Bank of Greece to take a 57.8-percent stake in ETBA in a move which lifted its share of the credit market to 10 percent and substantially strengthened its capital base.