Piraeus Bank, Greece’s fourth-largest, seems intent on striking a strategic alliance with Bank of Cyprus, of which it already holds a 8.8 percent share. Such a partnership would bring about a drastic realignment in the sector, creating a group with assets totaling about 55 billion euros – Greece’s second largest after National Bank. The prospect is also reported to be gaining popularity in Cyprus. Piraeus Bank President Michalis Sallas told shareholders recently that a deal will only be possible by mutual agreement, rather than through an aggressive buyout which is outside his bank’s corporate culture. «The goal is to create value for our shareholders. Our involvement in an aggressive buyout would be a battle that would take up a lot of time and a great deal of effort, would tie down a large number of our staff and would waste our energy at a time of fast growth,» he said. The conversation between the two banks began last summer, when Piraeus acquired through the stock market 2 percent of Bank of Cyprus, which responded positively. But this changed to negative when Piraeus upped its stake to 8.8 percent, raising suspicions of an aggressive buyout. Indeed, many believe that Bank of Cyprus’s bid for Emporiki last summer, rivaling that of Credit Agricole, was merely an indirect defensive move. However, it is now clear that the Cypriot bank is reconsidering its options, and senior officials say that any offer would be examined in a positive light, on condition that it creates value for the shareholders. This line of thinking largely matches that of Piraeus. Many believe that its recent hiring of Giorgos Provopoulos, one of the most experienced Greek bankers, to one of the top managerial jobs, reflects Piraeus Bank’s broader plans to create a new, much stronger group. The latest developments in the sector, with the acquisition of Emporiki by Credit Agricole and the triple merger of Egnatia, Laiki and Marfin, are dictating a re-examination of strategies. At the same time, many Cypriot investors who had adopted a reserved attitude toward Laiki’s absorption by Marfin, now appear to have reconsidered in view of the capital gains which the new scheme has created. Last Friday, the Piraeus group transferred a block of shares in Bank of Cyprus from offshore companies to the bank itself. The move is considered to be aimed at either facilitating the liquidation of the block at some point in the future (which would give 120 million euros in capital gains to Piraeus) or to make its interest in Bank of Cyprus official, which is seen as more likely.