Laiki Bank shares powered 1.16% ahead on Tuesday, pushing the CSE GENX to a record close following news that the island’s second largest financial group has acquired a bank in Serbia in the first overseas takeover by a Cypriot bank.
Laiki shares were the most active on Tuesday with 324,412 shares changing hands for a value of CYP 570,362, accounting for a third of the total volume of CYP 1.66 mln transacted on the CSE.
Following the announcement of the news, Laiki shares touched their recent all time high of CYP 1.77, but gave up some of their gains to close at CYP 1.75, for a daily gain of 1.16%.
The positive reaction was in response to an official announcement by Laiki Bank Group, which said it has reached a provisional agreement for the acquisition of a majority stake in the Serbian Bank Centrobanka a.d.
The purchase price for the total shareholding of the bank will range from EUR 38 mln to EUR 45 mln. The exact purchase price will be decided after the conclusion of a due diligence audit, which is already underway.
Centrobanka a.d. is based in Belgrade and has five branches, three business units and 22 sub-branches. It has a market share of 1.6% in deposits and 1.4% in advances.
The acquisition is subject to the respective approvals of the Central Bank of Cyprus and the National Bank of Serbia.
The expansion of Laiki Group in Serbia is an important step in the emerging Balkan region and marks an important variation in the strategy that Laiki Group has maintained thus far, that is to expand with full banking operations only in countries where there are sizable Greek and Cypriot communities.
Laiki Group believes that the expansion in Serbia will contribute positively to the operations of the Group creating additional value to its shareholders.
Centrobanka’s contribution to CPB’s net profit for FY04 stands at 3.5%, according to Egnatia Financial Services. According to Centrobanka’s P&L account its net profit for FY04 stood at CYP 750,000. Centrobanka’s total assets for FY04 were reported at CYP 29 mln compared to CPB’s CYP 5.7 bln.
Analysts broadly ignored the fact that senior officials of Centrobanka were charged and convicted in 2002 for setting up 586 dummy corporations, which were used for money laundering operations. Laiki sources insisted that the bank has been cleaned of all past irregularities, pointing that in 2004 alone, revenue jumped 46% compared to 2003 and the bank has received a clean-bill of health from the central bank of Serbia.
Modest gains
The CSE Main/Parallel index meanwhile edged 0.09% higher at 1666.78 points on total volume of CYP 1.66 mln on 1171 trades according to AGFN, the data provider, with 21 titles led by Laiki closing higher, 46 down while 109 were unchanged. The CSE GENX was 0.19% higher at a fresh record high of 107.30, while the FTSE/CySE 20 was up 0.10% at 564.70 points.
Bank of Cyprus was the second most active stock behind Laiki, but closed 0.38% lower at CYP 2.59 on 152,000 shares volume for a value of CYP 392.000. Hellenic Bank was the fourth most active, up 1.75% at 58 cents.
