Panayiotis Rougalas
The process for the sale of JCC Payment Systems, which began confidentially over the summer, appears to have hit a "snag," with Euronet as the only prospective buyer.
Sources with knowledge of the matter told K, which originally broke news of the potential deal between JCC and Euronet, that the terms of the sale haven’t met JCC’s expectations. Meanwhile, JCC's leadership is continuing with strategic planning that looks far into the future, reinforcing recent updates about delays in the overall sale process. Although the talks between Euronet Greece and JCC have stalled, no final outcome has been ruled out. Given the complexity and the many factors at play, some degree of unpredictability in the process was always expected.
Much of the debate over the sale has centered on what shareholders stand to gain from selling JCC, a company that effectively holds a monopoly in Cyprus's payment services sector.
As JCC's largest shareholder, Bank of Cyprus acknowledged in its August financial results that it is conducting a strategic review that "may lead to a partial or full sale" of its stake in JCC, though it noted that "no decision has been taken at this stage." From the moment news broke that JCC was exploring a sale, questions were raised within Cyprus, where JCC holds an undisputed leadership position in transaction services, significantly outpacing its competitors.
Questions around the sale revolve largely around the shareholders' potential gains from selling a highly profitable company that dominates the Cypriot market, generating millions in revenue, with competitors holding only a single-digit market share. The business community in Cyprus, understandably, also speculated about the Bank of Cyprus's potential plans should it divest, considering the bank currently holds a 75% stake. Various scenarios have emerged, including the idea of Bank of Cyprus acquiring another payment technology and trading company or retaining a partial stake in JCC instead of selling it outright. Another possibility is that transaction processing fees through Euronet could be part of the discussion. However, the prevailing scenario is that Bank of Cyprus might acquire a different trading company, invest in scaling it to JCC's level, and retain a portion of its JCC stake.
The timing of the sale and presentation process has also raised eyebrows, given Bank of Cyprus's strong financial performance. In the first half of 2024, Bank of Cyprus reported net income from fees and commissions of 86 million euros, down 4% year-on-year due to reduced fees from transaction-related activities. Specifically, JCC Payment Systems contributed about 14 million euros, or 11% of the bank's non-interest income for the period, showing a 3% increase year-on-year supported by trade volume growth.
Bank of Cyprus posted a net profit of 270 million euros for the first six months of the year, up 23% from the previous year. It doesn’t appear, therefore, that the bank would need to sell its stake in JCC merely to boost profits. The bank's non-interest income, which includes JCC revenue, amounted to 129 million euros for the first half of 2024, down 16% from the 153 million euros reported for the same period in 2023. This income consisted of net fees and commissions (86 million euros), net foreign exchange trading gains and financial instrument gains (13 million euros), net insurance earnings (23 million euros), net gains or losses from real estate sales (2 million euros), and other income (5 million euros).
The sole potential buyer Euronet, which represents Cyprus via its Greek operations, has a small office in Cyprus. Operating across over 200 countries, Euronet offers a range of financial services including money transfers, credit/debit card processing, ATM networks, point-of-sale systems, QR/barcode payment systems, digital gift cards, currency exchange, and other services. Euronet Worldwide Inc., the parent company, is listed on the NASDAQ (ticker: EEFT) and holds a leading global position in electronic payments and transaction processing.
In Greece, Euronet acquired Piraeus Bank Merchant Acquiring in March 2021 for approximately 300 million euros, gaining control of 205,000 POS terminals in 170,000 merchant locations and capturing a 20% market share in physical POS payments and around 40% in online/mobile digital payments.
Although Cyprus's figures differ, JCC's market dominance and profitability—an estimated 86 million euros for Bank of Cyprus in the first half of 2024—suggest a similar valuation, potentially around 300 million euros if the sale proceeds.
JCC’s shareholders include the Bank of Cyprus (75%) and a consortium of other banks, including Hellenic Bank, National Bank of Greece (Cyprus), AstroBank, and Alpha Bank (Cyprus).
[This article was translated from its Greek original]
