Marfin eyes HSBC stake in Laiki

New buyer must cough up CYP 133 mln

Global banking giant HSBC is ready to dispose of its 21.16% stake it controls in the Laiki Bank group, ending weeks of speculation of its intentions in Cyprus.

The prime candidate to take up the stake, estimated to be valued at CYP 133 mln, is the Marfin financial and investment group of Greece, that will need to pay the full premium of CYP 118 mln based on current market prices, plus CYP 15 mln for its share of the bank’s upcoming rights issue.

Laiki was also obliged to reduce the ceiling on the rights issue from CYP 75 mln to CYP 61 mln after HSBC said it would not take part in the offering, putting in doubt the potential success of the issue.

Marfin are also the underwriters of the rights issue.

The proceeds of the rights issue will help fund Laiki’s overseas expansion drive, including the takeover of a small Serbian bank.

On the other hand, the rating agency Moody’s is not changing its rating on Laiki and the outlook is expected to remain unaffected, despite HSBC’s pullout.

Laiki’s share price enjoyed a late recovery in 2005, ending the year with a 62% gain at CYP 1.83. But analysts are still cautious.

The Market Talk column last week posed the question: Will any bank pay CYP 133 mln and more to buy a 20% stake in a Cypriot bank and look forward to a return on equity ration of 14% by 2008 at a time when the majority of Greek banks have a ROE of 25% and want to lift this even higher and faster through their expansion drive in the Balkans?

The Cyprus Stock Exchange was informed of HSBC’s intention on Tuesday, as was the Central Bank.

HSBC’s decision to abandon its investment in Cyprus is linked to the bank’s overall investment policy in Europe, according to an announcement.