Axa in Greece, buys Alpha’s insurance arm

Greece’s Alpha Bank agreed yesterday to sell its insurance arm to French insurance giant Axa, the third major French player to enter Greece’s financial services sector. Alpha clinched a deal to sell its Alpha Insurance unit to Axa for 255 million euros ($320 million) and cooperate in bancassurance. Axa’s entry into Greece’s financial services market follows Societe Generale and Credit Agricole, which took over Greek banks Geniki and Emporiki respectively. Low real interest rates since Greece adopted the euro in 2001, coupled with low household indebtedness compared to the eurozone, have been driving a boom in credit in recent years as Greeks borrow money to buy property and consumer goods. Greek banks have also steadily expanded in the under-banked Balkan markets of Romania, Bulgaria and Serbia. This has made them interesting acquisition targets for bigger European predators looking for growth. Alpha Insurance will become a wholly owned subsidiary of Axa, while Alpha Bank will distribute Axa products through its network in Greece and the Balkans, heralding a «new era» for Greece’s second-largest lender, managing director Demetrios Mantzounis said. «The model with which we are now entering bancassurance is unique for the Greek market, given that we will have the support of one of the biggest insurance companies in the world,» said Michael Massourakis, Alpha’s senior manager of economic research and investor relations. Alpha said it will also work together with Axa on asset management to offer life and non-life insurance products. Capital gain «Alpha stands to gain as it will achieve its strategic objective to move away from non-core activities but still use its network to sell bancassurance products,» said analyst Antonis Kouleimanis at Egnatia Finance. «Axa on the other hand will get immediate access to a hugely underdeveloped insurance market,» he said in a note. Under the exclusive, long-term agreement, Axa will create and underwrite insurance products to be sold through Alpha Bank branches, which are also present in Romania, Bulgaria, Albania and Serbia. «The price is satisfactory,» said EFG Eurobank analyst Dimitris Apistoulas. «Alpha Bank will record a capital gain of 180 million euros in 2007.» (Reuters)

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