ECONOMY

Marfin boss insists on ‘friendly consolidation’

Marfin Group chief Andreas Vgenopoulos yesterday called on Piraeus Bank and Cyprus Bank to accept his «friendly proposal» for a merger with Marfin Popular Bank (MPB) that would create the largest Greek-owned banking group. «Ideally, I would like for the three sides to meet, agree on hiring international advisers, devise a business plan, set a (merger) timetable and agree on a share-swap rate,» Vgenopoulos told a press conference in Nicosia, which was also relayed to journalists in Athens. Both of Vgenopoulos’s intended partners have rejected the proposal. Bank of Cyprus has said that it is not a serious one, while Piraeus Bank, which had recently abandoned its attempt to acquire Bank of Cyprus, launched its own counterproposal for a merger with MPB. Despite his overtures for a «friendly consolidation,» Vgenopoulos also showed that he is determined to carry through with his proposal to the end, saying that any obstacles put up by the other two banks or by regulatory authorities «will, in the worst case scenario, result in delays.» «We are not conducting a hostile takeover… but it may be necessary to adapt our tactics,» he warned. A new giant? Vgenopoulos said that further consolidation of the Greek and Cypriot banking sectors is «imposed by the market» and referred to a saying by Alpha Bank Chairman Yiannis Costopoulos that «the Greek market has space for two-and-a-half banking groups.» MPB offers a share swap with no cash: Specifically, it offers 2.842 of its own shares for each Piraeus Bank share and 1.241 shares for each Bank of Cyprus share. If Piraeus Bank and Cyprus Bank shareholders were to accept Vgenopoulos’s proposal, the new bank would be among Europe’s top 25 banks and bigger than any of the existing Greek banks. Its assets would total -77 billion, with deposits of -54 billion and outstanding loan balances of -46 billion. The bank would also have 1,042 branches in 17 countries. In Greece, it would account for 16.4 percent of all bank loans and 15.3 percent of all deposits. Its profits would come from operations in Greece (56 percent), Cyprus (33 percent) and internationally (11 percent). However, Vgenopoulos said he did not believe the new bank would merely be the sum of its parts. «Synergies will help profits,» he said, estimating that the new bank would have 20 percent higher profits than MPB, Bank of Cyprus and Piraeus Bank separately. Not a hasty move One objection made by the other two banks is that MPB, itself the product of a three-way merger between Greece’s Marfin Bank and Egnatia Bank, and Cyprus’s Laiki Bank, had not even consolidated its own operations before launching its merger offer. Vgenopoulos dismissed the objection, saying that the consolidation of MPB will finish by the end of June and that there was little to consolidate, at least in Cyprus, where Marfin’s and Egnatia’s activity was virtually non-existent. «Ideally, we would have liked to wait until 2008, but we believed that Bank of Cyprus, at least, would have ceased to exist by then,» he said, adding that Cyprus’s shareholding structure made it vulnerable to a hostile takeover. Later yesterday, Bank of Cyprus officials angrily denied that. Top manager Harilaos Stavrakis said that Bank of Cyprus has great prospects for growth and that shareholders would reject any takeover proposals «because they completely trust the board’s decisions.» Vgenopoulos was careful to pour praise on Piraeus Bank Chairman and CEO Michalis Sallas, calling him «a great general and strategist,» although calling his counter-bid «a premature move.» However, Vgenopoulos could barely hide his disdain for the Bank of Cyprus board, appealing over their heads to top and middle managers, which he called «a dream team.» «I have the greatest respect for Michalis Sallas and Piraeus Bank’s big shareholders,» Vgenopoulos said. «I respect Bank of Cyprus’s board, but I think they are a little ill-prepared for the demands posed by globalization [and] approach strategic issues with less than perfect knowledge.» Vgenopoulos, a lawyer who also got into the brokerage business, entered the banking sector in 2001 by acquiring Piraeus Prime Bank, a small investment subsidiary of Piraeus Bank. He renamed Prime Bank Marfin Bank and in 2003 bought Hellenic Investment Bank, creating the Marfin Financial Group. Earlier yesterday, Vgenopoulos met with Cypriot Archbishop Chrysostomos, who expressed an interest in buying MPB’s shares in Hellenic Bank. The Cyprus Church, along with some monasteries, already have a 17 percent stake in the bank. «I have got the archbishop’s blessing and I feel much better,» Vgenopoulos told reporters half-jokingly. Last spring, investors from Dubai acquired a stake in Marfin and, a few weeks ago, announced they are willing to invest -5 billion in the group. Soud Ba’alawy, a member of Dubai’s ruling family, was elected to MPB’s board last Friday.