Bank of Cyprus making acquisitions to strengthen its position in the insurance sector

The Bank of Cyprus appears to be about to make acquisitions amid reports it is attempting to increase its non-interest income as much as possible, something the Group's CEO, Panicos Nicolaou, has repeatedly emphasised in the recent past.

In this context, the Bank of Cyprus appears to have entered into negotiations for the acquisition of Ethniki Insurance companies in Cyprus, specifically Ethniki Insurance Cyprus Ltd and Ethniki General Insurance Cyprus Ltd.

Bank employee union ETYK has also informed its members about this move, stating in a circular that it "is closely monitoring these developments and its goal is to secure jobs and their rights."

As ETYK characteristically notes, the union has already spoken with the management of Bank of Cyprus on the issue and "of course favours the entire effort", indicating at the same time that "as the union representative of the staff of both Ethniki Insurance and Bank of Cyprus, our Organisation has sent a letter to Bank of Cyprus (buyer) and requested full information on the issue, as well as assurances that the jobs and rights of our members will be guaranteed."

At the same time, ETYK underlines that "beyond the fact that our Organidation is the largest Cypriot shareholder of Bank of Cyprus - approximately 8% of Bank of Cyprus shares -, the relations between the leadership of our Organidation and the Management of Bank of Cyprus are very good and in fact, the role of ETYK is very important, since it constitutes the most important support for the protection of jobs and the rights of colleagues."

"Therefore," ETYK emphasises, "the most important guarantee for securing your working future is your membership in ETYK, which we must protect it like a rare gem," concluding that "in the period that follows, our Organisation will closely monitor developments, taking all necessary actions to protect its members and will keep you informed."

However, competent sources at the Bank of Cyprus contacted by InBusinessNews did not want to either confirm or deny everything that ETYK has been informing its members. They did however indicate the content of the union's information was accurate.

The forerunner of the Bank of Cyprus' actions

It is worth mentioning that the Bank of Cyprus's proposed move to acquire the subsidiaries of Ethniki Insurance in Cyprus comes just one month after the statements of the Bank's CEO, Panicos Nicolaou, regarding the Group's areas of interest for possible acquisitions.

It is recalled that Nicolaou, on the sidelines of the presentation of the Group's preliminary financial results for 2024 and when asked about it, had emphasised that "we are interested in strengthening our non-interest income much more, which means either acquiring an insurance company, an asset manager, private banking, or after banking."

It is noted that, although in the context of the same conference, Mr. Nikolaou had stated that at that time the Bank was not considering any option for acquisition, he had nevertheless stated that "if there is anything that can help us get where we want to go faster and that makes financial sense, we will look at it seriously."

Strengthening its position in the insurance sector

However, if the Bank of Cyprus proceeds and completes the acquisition of the subsidiaries of Ethniki Insurance in Cyprus - after receiving the relevant approvals from the supervisory authorities - then it will further strengthen and consolidate its position in the insurance sector.

It is recalled that currently the Bank of Cyprus has two insurance companies: Genikes Insurances and Eurolife, which hold first place in the General Sector and the Life Sector respectively.

Specifically, and based on the latest available data from the Insurance Association of Cyprus (IAC-SAEK) - which concerned market shares in the first nine months of 2024 -, Genikes Insurances holds first place in the General Sector with a percentage of 13.6%, while Eurolife holds first place in the Life Sector including accident and health insurance premiums from Life Sector companies with a percentage of 28.2%. Excluding accident and health insurance premiums, Eurolife maintains first place with a percentage of 28.9%.

With regard to the subsidiaries of Ethniki Insurance, based on the same data, Ethniki Insurance of Cyprus holds a 2.3% share in the Life Sector including accident and health insurance premiums and 2.7% in the Life Sector excluding accident and health insurance premiums, while Ethniki General Insurance of Cyprus holds a 3.6% share in the General Sector.

The move by the Hellenic Bank

It is also worth mentioning that this will not be the first time that a bank in Cyprus has acquired an insurance company, since Hellenic Bank made a similar move last year to acquire CNP Insurance.

In fact, for this move, Hellenic Bank has already received the approval of the Commission for the Protection of Competition and the deal, pending the remaining approvals, is expected to be completed by the end of the first quarter of 2025.

It is recalled that, on 24 April, 2024, Hellenic Bank entered into negotiations and has signed a Put Option agreement at a certain price with CNP Assurances for the acquisition of its subsidiary CNP Cyprus Insurance Holdings Limited, which operates in Cyprus and Greece and consists, among others, of:

• CNP Cyprialife Ltd,
• CNP Insurance Ltd,
• CNP Zois SA and
• CNP Cyprus Properties Ltd.

Under the Put Option agreement, CNP Assurances had the option to sell and Hellenic Bank irrevocably committed to acquire CNP Cyprus Insurance Holdings in the event of the exercise of this put option.

On 9 July, 2024, following the completion of CNP Assurances' consultation with the European Works Council, the bank and CNP Assurances signed the relevant Sale and Purchase Agreement.

The total price is expected to be €182 million.

(Source: InBusinessNews)