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25 April, 2024
 
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Why Astrobank and CDB bank couldn’t agree on a price

Secrets and lies of the Astrobank-CDB bank negotiations

Panayiotis Rougalas

Panayiotis Rougalas

The deal between Astrobank and CDB Bank fell apart over a few million euros, even though they had given a "reason" and had agreed on the price in September 2023.

Financial and non-financial disagreements between the two sides began in early October, as K was able to find out. One side was asking the other for more and more "stuff". Some demands increased the cost and some others did not affect the price.

The two sides eventually failed to reach an agreement and it was officially announced to the Cyprus Stock Exchange that the deal was off.

On a supervisory level, the deal was supposed to take place with the approval of the domestic regulator, the Central Bank of Cyprus, which favours consolidation and fewer banks.

As for the transaction price, the two sides split over a difference of single-digit millions, but that may have been the "tip of the iceberg".

It is 'rumoured' that CDB Bank had hinted to Astrobank that there could be another bidder for the bank, so it had all the leverage to negotiate the transaction on its own terms.

There are two investment entities in Cyprus that are also 'looking' for acquisitions of Cypriot banks of Kazakh and Armenian interests.

At the same time, the transaction proceeded at a time when the interest rate environment had given an extraordinary boost to banks. They were showing large profits, with the banks' net position having improved, and therefore their overall value had increased. In practice, CDB Bank had all the 'leverage' to negotiate the deal.

CDB Bank specializes in corporate loans and this was the portfolio that Astrobank was interested in, so that it could enhance its presence in this area. Astrobank already had a successful attempt, but also an attempt that had not paid off in the past in terms of acquisitions.

The reason is USB Bank, which was successfully integrated, and also the National Bank of Greece (Cyprus), which ultimately did not go ahead with a deal.

[This article was translated from its Greek original]

TAGS
Cyprus  |  banks  |  economy  |  money  |  deal  |  Astrobank  |  CDB

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