A closer look at Alpha Bank Cyprus' acquisition of AstroBank

Alpha Bank announced this week that it has entered a binding agreement for the acquisition, in essence, of all assets and liabilities of the banking activity, as well as the employees of AstroBank, in a move that strengthens its position in the market and elevates it as the third largest systemic bank in Cyprus.

• Read more: New major bank deal: Alpha Bank to acquire AstroBank for €205m

According to an InBusinessNews anaysis, this is a strategic move, and another important milestone for Alpha Bank, as it strengthens its presence in Cyprus and improves its long-term financial performance in the region.

With the overall deal expected to contribute over €100 million annually in recurring net profits to the Alpha Bank Group, the transaction will be financed from the Group's existing surplus capital without affecting its dividend policy in the future, it said.

It is also expected to lead to an increase in earnings per share (EPS) of approximately 5%, an increase in RoTE of ~60 basis points and a 40% return on regulatory capital.

A market share of 10%

Upon completion of the transaction, Alpha Bank Cyprus is expected to have a market share of around 10%, which, combined with a transformation programme currently being completed, is expected to position it as a modern alternative banking choice for households, small and medium-sized businesses, and large business groups in Cyprus.

This is a transaction that is part of the Alpha Bank Group's broader strategy for targeted development moves based on specific, strict criteria that create prospects and added value for shareholders, while strengthening the ability to provide specialized products and services, either in markets of interest, such as Cyprus, or in individual service sectors.

One such example is the recent acquisition of Flexfin and its merger with ABC Factors, creating the most modern factoring platform in Greece.

The key highlights of the transaction in Cyprus

• Market expansion: Alpha Bank Cyprus strengthens its presence with a market share of approximately 10% in terms of total assets and emerges as the third systemic bank in the Cypriot economy.
• Business development: The transaction is expected to significantly strengthen the Group's loans and deposits in Cyprus (loan portfolio +60%, deposits +70%) while, with full calculation of the estimated synergies, it is expected to double the profitability of the Group's subsidiary in Cyprus.
• Strategic Compatibility: The acquisition brings together two fully complementary banking institutions, with AstroBank contributing a diversified loan book focused on small and medium-sized enterprises.
• Timeline: Subject to receipt of the necessary regulatory approvals, the transaction is expected to close in the fourth quarter of 2025.

The strategic benefits for the Alpha Bank group

Enhanced financial performance: The consolidated banking entity in Cyprus is expected to contribute over €100 million in recurring net profits to the Alpha Bank Group.

Asset growth: Alpha Bank's exposure to Cyprus will increase from ~5% to over 8% of the Group's total assets.

Customer base expansion: The Group's new customers in Cyprus are expected to increase by approximately 50,000, creating significant prospects for further revenue, through a competitive package of services and products.

Strong return on investment:

• Earnings per share (EPS) increase by 5%.
• RoTE increase by ~60 basis points.
• 40% return on regulatory capital.
• Increase net profit by €50 million annually.

Capital impact: The transaction is expected to have an impact of approximately 40 basis points on the Group's CET1.

Zero impact on Group-level NPEs: The acquisition excludes a portion of AstroBank's non-performing exposures (NPEs), making the acquisition essentially neutral in terms of NPEs at the Group level.