ECONOMY

Wave of consolidation likely to change the face of Greek banking

More than a half-dozen Greek mid-sized banks are poised for a wave of consolidation in the next few years as part of a Europe-wide trend, the head of Deloitte’s bank consultancy said yesterday. «There are some six to eight banks that could be considered mid-market, medium-sized banks, where we can see some consolidation taking place,» Jack Ribeiro, managing partner at Deloitte’s global financial services industry practice, told Reuters in an interview. He named mid-sized banks, including Geniki – which is majority owned by France’s Societe Generale -, Egnatia, Attica, Aspis and Cyprus-based Laiki and Portuguese-controlled Nova as prime acquisition targets. «It’s the same trend no matter where you go,» Ribeiro said. «We see Europe as the next wave of consolidation. It happened in the United States starting in the 1990s. And after Europe, we are projecting that it will occur in a bigger way in Asia.» He predicted that there would be over 700 bank acquisitions in Europe over the next four years. In Greece, liberalization of the banking sector in the early 1990s brought about a first wave of consolidation, which led to the creation of five major banking groups which control more than an estimated two-thirds of the market. But another dozen or so smaller and newer players still exist, some of whom – such as Laiki’s Greek unit and the Marfin Financial Group – are already exploring a merger, along with Egnatia bank. Banking on the Balkans As Greece’s five big banking groups expand further abroad, they will increasingly become potential acquisition targets for foreign banks, Ribeiro predicted. «As the Greek banks expand into these other markets, they are going to be a natural target for some of these bigger [foreign] banks who want to have some presence in the region,» he said. Over the past five years, Greece’s big banking groups – National Bank of Greece, Alpha, EFG Eurobank, Piraeus Bank and Emporiki Bank – have expanded aggressively in the Balkans. National Bank and Eurobank also have ventured into the Turkish market recently with the acquisitions of Finansbank and Tekfenbank, respectively. Greek banks trade at about 17.7 times forecast 2006 earnings, compared with a multiple of about 17.2 times for European banks as a whole, according to Reuters Estimates. «The valuation of the Greek banks is at a premium over the European average,» Ribeiro said. «But consolidation will happen, particularly as the Greek banks become more regional players. It will increase the appetite for someone to do an acquisition, and then they will pay the premium.»