Eurobank edging towards Hellenic takeover

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Eurobank is moving closer to a takeover of the island’s second-largest lender after solidifying its position as Hellenic Bank’s major shareholder acquiring another 3.2%, essentially buying out Senvest Management LLC.

Combined with the initial deal to buy 13.41% of Wargaming’s 20.61% stake for €70 mln earlier last month, Eurobank will command 29.2% of Hellenic’s capital.

The Wargaming acquisition is subject to regulatory approvals and will be completed upon full satisfaction.

If Eurobank makes another move to acquire additional capital and reaches the 30% mark, then according to the Cyprus law on acquisitions, it must make a public offer to take over Hellenic.

Following the deal with Senvest, Eurobank’s stake is 15.8%. When the 13.4% to be acquired from Wargaming is added, Eurobank’s share in the bank will be 29.2%.

Eurobank, the third largest banking institution, joined Hellenic’s shareholders in June 2021, when they bought the 12.6% share from fund managers Third Point Hellenic Recovery Fund.

They then made a deal with Wargaming for their 13.4% share of the bank’s capital at the end of November.

Their latest acquisition from fund managers, Senvest Management, has the banking world bracing for a possible buyout.

With the completion of the deal, the Eurobank group, which operates in Cyprus through its company (Eurobank Cyprus), focuses on business banking, is expected to become the largest shareholder of Hellenic Bank, a position currently held by Dimitra Investment, which has a 21.3% share.

Hellenic posted a €76.4 mln profit for the first nine months of 2022, compared to a profit of €21 mln in 2021, reflecting a rise of 263% year-on-year.

It has also completed its latest and last voluntary exit scheme, which saw 450 employees pressing the exit button, leaving with a maximum €200,000 compensation each.

This change in the bank’s capital structure also follows a rocky period which saw its CEO Oliver Gatzke benched over market abuse accusations.

Gatzke was back in his office last month after a probe by the Cyprus Securities and Exchange Commission found no wrongdoing on behalf of the German banker.

The tension between the bank’s CEO and shareholders exploded at the AGM held in September, when the then-largest stakeholder, Demetra Holdings, essentially accused Gatzke of wrongdoing.

With Demetra Holdings now the second major shareholder, sources close to Hellenic told the Financial Mirror that the change in the bank’s capital structure will go a long way in diffusing any bad feelings between shareholders and Gatzke.

The same sources said that for some time, major shareholders needed to be on better terms with Gatzke, whom they blame for the bank, not hitting profit targets.