David no longer a threat to Goliath in race for Emporiki privatization

Credit Agricole yesterday remained the only suitor for Emporiki Bank after Bank of Cyprus (BoC) pulled out its bid, angering the government, which had hoped for improved offers for Greece’s No. 4 bank. Even though the country’s securities watchdog rejected BoC’s request to withdraw its bid, leaving it technically in force, the Finance Ministry said it was no longer taking it seriously, leaning toward Credit Agricole’s cash-only offer. «Greece will not seriously consider BoC’s offer,» Finance Minister Giorgos Alogoskoufis told reporters. «The moves by BoC over the last few days were not in line with the seriousness and responsibility required by the (privatization) procedure.» In a surprise move on Wednesday, BoC abandoned its bid for Emporiki, clearing the way for Credit Agricole to take over Greece’s fourth-largest lender by assets, the top item on the government’s 1.6-billion-euro privatization agenda this year. The Cypriot bank’s board said it had decided unanimously to ask Greek regulatory authorities for approval to pull out of the race. Yesterday, Greece’s securities regulator rejected the request, saying the legal conditions had not been met. Analysts said Greece’s securities watchdog was not convinced by the reasons BoC cited for wanting to back out: Its concerns after a court opinion questioned government plans to set up a single pension fund for the banking sector. «According to the law, BoC cannot withdraw its offer unless there are very concrete reasons for doing so, and the regulator has judged that no such circumstances exist,» said an analyst who did not want to be named. «Technically, the offer remains in force but we expect the central bank of Cyprus not to give its blessing, which means BoC will not be able to proceed in any case,» the analyst said. Feeling the French hug The withdrawal of BoC shatters government hopes for an improved French bid, analysts said. The regulator has set a July 25 deadline for any new counteroffers. «Without a rival, Credit Agricole is under no pressure to improve its bid, meaning the price the government gets may turn out to be lower than it could have expected before BoC’s withdrawal,» said analyst Elias Lazaris at Artion Securities. Agricole, which already owns 9 percent of Emporiki shares and 11 percent of voting rights, has offered 23.50 euros a share, all in cash, valuing the Greek bank at 3.1 billion euros ($3.9 billion). BoC had offered 3.25 of its shares plus 6 euros in cash for every Emporiki share, surpassing overall the French bid. The Greek government had hopes the BoC bid would push Agricole to raise its offer. «From the start, the government was more supportive of the Agricole bid, thinking the French were more confident, more sure of their desire to do the acquisition than BoC,» Lazaris said. «The finance minister has said he prefers cash and wants a foreign bank as this would be good for competition in the Greek market,» he added.