Mergers and acquisitions activity in the banking sector has been high in 2018 and reports are in that the Cyprus banking map is expected to change even further. Following the absorption of the Cyprus Cooperative Bank by Hellenic Bank and the sale of Bank of Cyprus’s NPLs worth 2.7 billion Euro to Apollo Global Management, there is now another major development.
The former Piraeus Bank, now known as Astrobank has the lead in the ongoing discussions to acquire the National Bank of Greece (Cyprus).
Kathimerini reports that Eurobank was also interested but talks did not progress, its size would not enable it to obtain approval from the European Central Bank's supervisory mechanism for such a move.
Kathimerini contacted Astrobank's Managing Director and CEO, George Appio, who neither confirmed nor denied news on the proposed acquisition. Appio said that "Astrobank is pursuing growth, including strategic acquisitions of other banks on the island, always in the context of prudent and careful management of each transaction".
By the end of October Astrobank is reportedly expected to receive an official answer from the National Bank of Greece. In the meantime Astrobank is finalising its absorption of USB Bank which is expected to be completed by the end of the year.
Following the current M&A cycle Astrobank is expected to become the third largest Cyprus based bank. It is worth noting that the performing loans of the National Bank of Greece (Cyprus) amounted to 340 million Euro.
In its 2017 financial results NBG Cyprus reported a loss of € 7.06 million, compared with a profit of € 4.4 million for 2016. The Bank's loans in 2017 amounted to € 747.1 million and its deposits at 572 million. The bank had also announced that it would decrease its foreign operations.
On the other hand the acquisition of USB Bank by Astrobank will increase the balance sheet of Astrobank by 55% with total assets exceeding € 2 billion, gross loans of € 1.2 billion, customer deposits to € 1.9 billion and equity to reach € 160 million.
According to Kathimerini the European Central Bank views favourably mergers and acquisitions in the Cypriot banking sector as it increases the ability of banks to absorb financial shocks while at the same time allows for a more transparent regulatory field.