Piraeus to take over Bank of Cyprus, Laiki branches in Greece

Piraeus Bank, the third biggest lender in Greece, was chosen Friday to take over the branches of the Bank of Cyprus and the Cyprus Popular Bank, a move that will not earn the Cypriot banks direct revenues, but will drastically reduce their debts and help ease the rescue bill fro near-bankrupt Cyprus.

Other bidders for the 300 branches and their portfolio of about 15 bln euros in deposits and some 24 bln euros of loans included Alpha bank and the National Bank of Greece. Cypriot banks hold 8% of Greek banking deposits and 10% of loans.

The takeover could put Piraeus at par with giant NBG that is government-controlled and has enjoyed a near hegemony over the Greek banking sector.

The Eurogroup finance ministers imposed a conditional rescue package of 10 bln euros last weeekend, subject to Cyprus raising a further 5.8 bln euros from a levy on all savings accounts above 100,000 euros.

The inability of Cyprus parliament to accept the package on Tuesday forced all banks to remain shut throughout the week, causing extensive harm to the business community where payments have stopped and limited to cash deals.

Piraeus shares closed up 20% after news of the deal, announced by Greece's bank bailout fund, which is subject to approval by European competition authorities.

“This [deal] will shield Greece and safeguard all deposits held in Cypriot-owned banks,” Finance Minister Yiannis Stournaras said earlier on Friday.

Earlier, the Cyprus government confirmed that President Nicos Anastasiades and Greek Prime Minister Antonis Samaras discussed “the regulation of the matter of alienating Greek branches of Cyprus banks was confirmed, with the most beneficial terms under the circumstances and with an important benefit for the Cypriot side.”