Credit Agricole braces for rival bid in race for Emporiki

PARIS – French bank Credit Agricole might have to raise its offer to win control of Greek bank Emporiki now that a potential rival has emerged, analysts said yesterday. Bank of Cyprus is considering a bid for 100 percent of Greece’s fourth-largest lender, the target of a 3.1-billion-euro buyout offer from Credit Agricole. «Since the Greek government has said that the tender has to be equal and match what Credit Agricole has offered, which is for 100 percent, then I would assume we should go for 100 percent,» Yiannis Kypri, Bank of Cyprus group chief general manager, told Reuters. Credit Agricole has offered 23.50 euros per share to gain full control of Emporiki, in which it already has a 9 percent stake. However, Emporiki shares have consistently traded above Agricole’s offer, indicating that the market feels Emporiki could attract a better price. Emporiki shares closed up 2.94 percent at 27.30 euros yesterday, while Credit Agricole shares were down 0.5 percent at 27.94 euros at noon. «The market is expecting a big battle. Credit Agricole could increase its offer, even if Emporiki’s valuation is starting to become slightly stretched,» said Samir Essafri, an analyst at French fund management group Richelieu Finance. Emporiki trades at about 20 times its estimated 2006 earnings, according to Reuters Estimates, whereas banks in the DJ Stoxx European banking sector index trade on average at about 10 times their estimated 2006 earnings. Credit Agricole said it was too early to comment on the Bank of Cyprus move, especially since that bank had not given any indication of what kind of price it might offer. The French bank also reiterated it could even sell its Emporiki stake at the right price. However, analysts said Credit Agricole would be unlikely to give up on Emporiki too quickly. «They’re not just going to back away. Emporiki is one of the weaker Greek banks in terms of return on equity. Credit Agricole will feel it’s something they can fix, turn around and churn more money out of,» said Ion-Marc Valahu, fund manager at Agilis Gestion, which owns Credit Agricole shares. Finance Minister Giorgos Alogoskoufis told reporters yesterday that the government, which holds around 40 percent of Emporiki, was committed to seriously reviewing all offers that could be submitted for Emporiki. He added that the Greek Finance Ministry would be happy to meet any bank that was interested in Emporiki. Credit Agricole’s bid for Emporiki is part of the French bank’s strategy of expanding abroad to offset sluggish growth at home, where it faces stiff competition from rivals BNP Paribas and Societe Generale. Credit Agricole is also currently looking at UK bank Alliance & Leicester.

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