Further foreign interest expected in banking sector
The forthcoming privatizations or flotations of three banks will be one of the main catalysts for merger and acquisition developments in the Greek banking sector this year, notes a study by PricewaterhouseCoopers. In 2005 in the banking and other financial services sector, 34 mergers and acquisitions (M&A) were made, reaching 16 percent of the whole and making the sector the second-most active in transaction figures last year, the report suggests. M&A transactions in the sector reached 863 million euros. The biggest transaction in value was the acquisition by Millennium BCP of the remaining 50 percent of NovaBank for 330 million euros. The Portuguese company now owns 100 percent of NovaBank. Millennium is the second foreign bank, after Societe Generale, that has recently obtained control of a Greek bank. The second transaction in volume in the sector was the acquisition of 97 percent of Serbia’s Jubanka by Alpha Bank in January 2005 for 167 million euros. This transaction marked another year of intense activity by Greek banks in Southeastern Europe, continuing their consolidation in the region. Last year’s main feature was the redemption of banks’ subsidiaries, the report suggests. The sales of subsidiaries in mature markets are a good example, with the sale of the Atlantic Bank of New York and of NBG Canada by the National Bank of Greece cited as the most important. Medium-sized banks focused on concentrating other small and medium-sized banks, with the acquisition of 10 percent of Egnatia Bank by Marfin Financial Group last September. In early 2006 Marfin raised its stake in Egnatia between 34 and 49 percent and entered Laiki Bank. The state’s concession of 20 percent of Emporiki Bank will trigger important developments, the PricewaterhouseCoopers report argues, while Credit Agricole’s decision about using its call option will be significant for the prospect of the possible entry of other foreign banks into the Greek banking sector. The big banks’ high profits last year mainly come from retail banking and small and medium-sized enterprises, from financial act revenues thanks to the rise of the stock market’s index and from the reduced tax for some banks. These profits will fund their further growth abroad. Increased interest on the part of foreign credit institutions and business funds is expected this year as well, while the concentration trend among small and medium-sized banks will continue; their profits are smaller than the big banks’ and searching for strategic alliances seems the only way out, concludes the report.
