Obstacles to Eurobank’s Hellenic takeover

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Greece’s Eurobank is reportedly preparing a strategic roadmap to takeover Hellenic Bank, the island’s second-biggest lender; however, there are obstacles as major shareholders are unwilling to budge.

With a 29.2% Hellenic stake, Eurobank has not been shy about its plans to take over the bank with the help of minor stakeholders.

Other stakeholders, including the bank employees’ union ETYK, are expected to try to fend off the move, which seems to be inevitable.

The subsidiary of Greek Eurobank SA and the island’s third largest banking institution joined Hellenic’s shareholders in June 2021, when they bought the 12.6% holding from fund managers Third Point Hellenic Recovery Fund.

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

Eurobank became Hellenic Bank’s major shareholder after acquiring another 3.2%, essentially buying out Senvest Management LLC earlier this year for €16.74 mln.

Eurobank now owns 29.2% of the share capital of Hellenic Bank with the almost certain prospect of raising its percentage to 54%.

It awaits approval before mid-2024 of the deals it struck to buy the shares held by key existing major shareholders: Pimco and Wargaming.

At the end of August, Wargaming announced its decision to sell its remaining stake of 6.8% (28,023,767 shares) in Hellenic to Eurobank. The deal is valued at €65.9 mln, equivalent to €2.35 per share.

Following the approval of the deals, Eurobank will proceed to a mandatory public offer to the shareholders of Hellenic.

Eurobank is Hellenic Bank’s largest shareholder, followed by the investment company Dimitra and Logicom, which collectively hold around 25%.

Pimco retains 17.3% of Hellenic.

News site Stockwatch quotes Eurobank sources saying the group is willing to offer the remaining shareholders the same deal with Wargaming of €2.35.

But the second largest shareholder of Hellenic, Dimitra Investments (21 %), does not intend to sell out nor to divest its shareholding.

Also, Logicom Services Ltd, which holds 3.33% of Hellenic, seems unwilling to sell its stake.

Logicom is the largest shareholder of Dimitra, with a percentage of 29.62%. In the context of the increase of Hellenic’s share capital, Dimitra has invested approximately €100 mln in recent years.

Around 15% of the Hellenic’s equity capital is owned by individuals.

About 25,000 shareholders are registered in Hellenic’s share register.

ETYK’s providence and welfare funds own 6.44% of HB’s shares.

The three largest shareholders are expected to band together against a public proposal of Eurobank.

ETYK has reasons for opposing a sellout, as Eurobank’s employment regime differs from Hellenic’s.

Most Hellenic employees belong to ETYK, while at Eurobank, staff are employed under personal contract agreements.

For the first time, Eurobank had included Hellenic Bank in its financial results, listing it as a related company, boosting its profits for the first half of 2023.

Eurobank Cyprus posted soaring profitability after tax, with net profits approaching the profitability of the full year 2022 (€94.3 mln) due to rising interest rates and the high remuneration of its liquidity held at the ECB.

Profit after tax for the first half of 2023 was €90.8 mln, increasing by €53.6 mln or 144% compared with the first six months of last year.