Panayiotis Rougalas
Cyprus’ small banks have become targets for global fintech companies and financial institutions, with potential acquisitions aimed at securing a European banking license. Among them, Ancoria Bank and Cdb Bank appear to be at the center of renewed interest from major fintech firms with operations both in and outside Cyprus.
While these banks have not taken steps to acquire fintech companies themselves—despite increased profitability from rising interest rates—fintech firms are actively exploring various strategies. These include outright acquisitions, equity participation, and shareholding transactions, positioning themselves for potential takeovers.
The main shareholders of XM and Ancoria Bank
Limassol-based firm XM has long been rumored to have held a 9.85% stake in Ancoria Bank over the past three to four years. In late 2023, a Kazakhstan-rooted company (not XM) reportedly attempted a takeover of Ancoria Bank. However, the deal stalled due to regulatory requirements that were never fulfilled. Allegedly, XM then sold its 9.85% stake to other existing Ancoria Bank shareholders to facilitate the transaction.
But, in a more recent development, as Alpha News Cyprus reported as well, XM's main shareholders, Constantinos Kleanthous and Pambos Panayiotou, acquired shares in Ancoria Bank close to the same percentage previously held by XM.
There is a possibility that the ultimate purpose of this move is to transfer the whole of Ancoria Bank to XM's major shareholders at a later stage, if this is confirmed in the coming months through share transactions.
It will be an interesting development for XM's major shareholders and by extension, if they decide to do so with further moves, XM could become the technology - fintech company to obtain the coveted European banking license through Cyprus, thus opening up new business horizons.
Competing Offers
Ancoria Bank is currently valued at approximately €45 million, meaning that Kleanthous and Panagiotou’s recent acquisition—under 10% of the bank’s shares—would have cost them around €5 million. However, sources indicate that the Kazakh-rooted company’s takeover bid for Ancoria Bank, which reached the Central Bank of Cyprus (CBC) but ultimately did not proceed, was nearly double that amount—just under €100 million.
By the way, the proposal for the acquisition of Ancoria Bank could well have been submitted by Freedom 24, as in an interview with Politis in late 2023 it was written that it was looking for a bank to acquire in Cyprus, but also in K recently, it was said by the CEO of Freedom 24, Mr. Timur Turlov, that "Freedom24 is considering expanding its services in Cyprus beyond simple brokerage, with a particular focus on digital banking". So the interest is there, remains and would have been a realistic move.
Cdb Bank: Another Target?
Meanwhile, Cdb Bank has also drawn the attention of fintech firms seeking a banking license in Cyprus. Following its failed merger attempt with AstroBank in late 2023, Cdb Bank entered discussions with a non-EU entity with Armenian roots regarding a potential acquisition. However, these negotiations have since collapsed.
Despite this, Cdb Bank continues to receive regular acquisition inquiries, particularly due to its small size and strategic positioning. A new potential suitor—reportedly linked to Russia—is now in talks, though securing regulatory approval for such a deal could prove challenging given the strict oversight of the European banking sector.
While Ancoria Bank’s ownership structure is relatively straightforward—largely backed by Swedish businessman Sievert Larsson, the founder of Ancoria Insurance—Cdb Bank’s multi-shareholder composition complicates potential acquisition efforts. The Cdb bank’s primarily Cypriot shareholders appear divided on whether now is the right time to sell, despite recent profitability from higher interest rates.
Regulatory Hurdles for Fintech Acquisitions
The strategy of acquiring a small bank to obtain a European banking license is not new and has been attempted in various EU countries, with mixed success. The Central Bank of Cyprus (CBC) has already received applications from fintech companies seeking a banking license, but approvals have yet to be granted, with each case facing different regulatory justifications.
The trend of fintech firms acquiring traditional banks has been growing across Europe. While Cyprus has seen a rise in electronic money institutions (EMIs) and payment institutions (PIs)—with 26 licensed EMIs and 11 licensed PIs as of late 2024—local banks have been pursuing the opposite strategy, acquiring fintech companies to enhance their digital capabilities.
*This article was translated and summarized from its Greek original. To read the full story in Greek, click here.
