ECONOMY

Feud over bank deal

NICOSIA (AFP) – The former head of Cyprus’s second-largest bank voiced sharp opposition yesterday to a bid for two Greek financial institutions in a three-way merger aimed at a creating a 22-billion-euro regional super-bank. Kikis Lazarides said he resigned as Laiki Bank chairman in July because he did not believe the terms of the deal with Marfin Financial Group and Egnatia Bank of Greece were in the best interests of Laiki shareholders. He also spoke of a personal clash of interests with Marfin’s vice chairman, Andreas Vgenopoulos, accusing him of trying to «intimidate» him into publicly supporting the merger. Vgenopoulos has dismissed any suggestion that there is anything underhand about the three-way deal. Lazarides’s statement adds to disquiet among some Laiki shareholders who claim they are being made to pay a high price for the Marfin-Egnatia merger. The Cypriot bank will hold an extraordinary general meeting today when shareholders will be asked to back an increase in share capital to finance the deal. Laiki is offering 5.7570 shares for each Marfin share and 1.2090 shares for every Egnatia share. The bid values Marfin shares at 30 euros and Egnatia at 6.30 euros each, with Laiki seeking to raise $3 billion dollars of share capital to fund it. The merger is aimed at creating a «powerful banking group in Southeast Europe,» putting it first in the Cyprus market and second in Greece. The new group at the end of 2006 would have assets of 22.3 billion euros, total deposits reaching 15.8 billion euros, 300 branches and a presence in 13 countries, Laiki has said. It has forecast that the new banking group can expect net profits of 510 million euros by 2009. Marfin owns around 10 percent of Laiki and more than 36 percent of Egnatia; the largest shareholder in Marfin is Dubai Financial with 31.5 percent. For the merger to go through, Laiki said it needed to acquire a minimum 40 percent of both groups.