Demetra and ETYK hold the key to Hellenic-Eurobank merger

"Whether at some point in the future we proceed with some kind of merger or absorption we cannot prejudge at this moment... It does not depend only on us, we must act in cooperation with the rest of the bank's shareholders,” Fokion C. Karavias, CEO of Eurobank Ergasias, stated back in March.

He was essentially throwing the ball in the other shareholders’ court, as the bank awaited regulatory approval to acquire a majority stake in Hellenic Bank. He stressed that any future merger would be considered at a later stage and in line with the other shareholders’ wishes.

In the immediate future, Karavias said Eurobank Cyprus and Hellenic will operate as two separate, independent banks with separate managements and Boards.

Eurobank became the major shareholder in Hellenic Bank this week, after the regulatory authorities gave the nod to a share capital increase that took its stake up to 55.3%. Alongside, it submitted a public takeover bid to acquire 100% of the bank – as mandated by law.

This is a process that will take at least four to five months to complete, while in order to come back with a new takeover bid to the shareholders who do not sell their shares during the current bid, another six will have to pass.

And so it becomes clear that Eurobank Cyprus and Hellenic Bank will continue to operate as two separate entities for at least another year – as Karavias has also previously stated.

It is worth noting that Eurobank needs to own at least 75% of Hellenic’s share capital in order to implement its strategic plans unhindered – this is the cap required for decisions such as a merger.

Demetra and ETYK hold the key

In light of the above, it seems the key to any future developments is being held by the two other significant shareholders in HB: Demetra – who has a 21.3% stake and also participates in the share capital with Logicom with another 5% indirect stake – and ETYK, the bank employees’ union that holds around 11% through its various funds.

It is no secret that Demetra and ETYK do not view the prospect of a merger with a positive eye. Indicatively, they have appealed separately to the Administrative Court against the decision of the Commission for the Protection of Competition (CPC) to approve the act of concentration in Eurobank’s acquisition of Hellenic's share capital.

The hearing for ETYK’s case is scheduled for 8 June, with the CPC ordered to submit any objections on that same date. Demetra’s hearing is on 25 June, with the CPC instructed to submit any objections within four weeks.

However, now the ECB has greenlit the acquisition, it is doubtful whether an administrative court ruling will be able to reverse the situation.

Meanwhile, a source from Demetra has told InBusinessNews that it has no intention of selling its shares, adding that it holds a strategic stake in Hellenic which is crucial in relation to any future strategic plans Eurobank may have.

“What I can say with conviction is that there is no way we will sell out to Eurobank in the takeover bid,” the source said categorically.

ETYK is expected to maintain a similar stance.

(Source: InBusinessNews)