ECONOMY

Piraeus is not drafting new offer for BoC

Piraeus Bank will not dig deeper into its pockets to make a new offer for Bank of Cyprus (BoC), its chief executive said yesterday, sending shares of both banks lower. Abandoning the courtship leaves BoC game for other potential predators and Greece’s fourth-largest lender with more cash to fund organic growth at home and abroad or to pursue other deals. «Piraeus Bank is not considering submitting a new offer for Bank of Cyprus. In due course the bank will liquidate the block of shares in Bank of Cyprus in a way that will maximize gains for shareholders,» Piraeus Bank’s CEO Michael Sallas said in a statement. Piraeus had been pursuing a tie-up with BoC since amassing a stake of about 10 percent in the Cypriot bank, considering its branch network in Greece a good complement to its own growing presence. BoC, the largest lender on the Mediterranean island, has been rapidly expanding in Greece since the 1990s. Last year it withdrew from a race to take over Greece’s Emporiki Bank, which was finally acquired by France’s Credit Agricole. In December, Piraeus offered 2.0 euros in cash and 0.36 of its shares for every BoC share. The offer valued each BoC share at 10.63 euros and the entire bank at 5.8 billion euros ($7.6 billion). BoC’s board unanimously rejected the offer on the grounds that Piraeus’s proposal did not reflect the true value of the bank, citing higher target prices set by international investment bank analysts. BoC shares were down 2.65 percent at 11.02 euros while Piraeus Bank shares lost 1.81 percent to 24.96 euros. «For Piraeus, options for growth via buyouts in Greece are shrinking; there aren’t a lot of banks up for sale,» said analyst Elias Lazaris at Artion Securities. At current prices, Piraeus Bank stands to realize a capital gain of about 180 million euros from the sale of BoC shares, a source at the bank said. Piraeus Bank shares trade 15.8 times estimated 2006 earnings, a premium to European peers such as BNP and BBVA which have multiples of 10.6 and 12, according to Reuters Estimates. (Reuters)