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Alpha Bank-Emporiki Bank deal a 'significant step' towards restructuring of banking system

Paris-based Credit Agricole S.A. and Greece-listed Alpha Bank on Monday confirmed that the former has entered into "exclusive negotiations" Alpha for the sale of its subsidiary in Greece, Emporiki Bank. The transaction is expected to be completed by Dec. 31, 2012 and is subject to applicable regulatory approvals and procedures as to work councils and employment representative bodies of Credit Agricole S.A., according to a press release by Alpha.
"Upon completion of the transaction, Alpha Bank will purchase Emporiki Bank recapitalised by Euro 2.85 billion. Prior to completion, Credit Agricole S.A. will inject a further Euro 0.5 billion of capital in addition to the Euro 2.3 billion capital injection completed in July 2012. Credit Agricole S.A. will also subscribe into a Euro 150 million convertible bond to be issued by Alpha Bank, which, at the discretion of Credit Agricole S.A., will convert into Alpha Bank common shares, subject to certain terms and conditions. Alpha Bank will acquire Emporiki Bank's entire share capital for a nominal consideration in accordance with the terms and conditions set by the Hellenic Financial Stability Fund. The transaction results in a net recapitalisation of the combined group of Euro 3 billion and contributes towards Alpha Bank's own recapitalisation plan." It also called the prospect a significant step towards the restructuring of the Greek banking system.

Alpha Bank said it will proceed with a plan to integrate Emporiki Bank, completing a reorganisation plan launched by Credit Agricole, following the takeover of Emporiki Bank in 2006. The integration of operations is expected to have significant financial benefits, with synergies on operating costs projected at around 150 million euros annually. The acquisition of Emporiki Bank is a significant step also because the new banking group will hold a pro forma market share of 19 pct in savings, a 25 pct in loans and a leading position in mortgage and corporate loans in the Greek market. Pro forma assets will total 78 billion euros, based on March 31 2012 figures.

Alpha Bank said the acquisition is expected to have been completed by December 31, 2012, after taking the necessary approvals by market authorities.
The recapitalisation of Greek banks from the Greek Financial Stability Fund will determine the French group’s participation in the new bank, Credit Agricole and Alpha Bank said in their statements released on Monday. The French group, however, noted it will acquire convertible bonds of the new banking group and will remain as a strategic investor.

Emporiki Bank is one of the oldest banks in Greece, founded in 1907. In June 2000, Emporiki Bank signed a strategic partnership agreement with Credit Agricole, with the French group buying an initial 6.7 pct equity stake in the Greek bank.

Credit Agricole, is the largest retain bank in France, with a global presence, employing more than 160,000 people in 74 countries, with 58 million customers worldwide and operating a branch network of 11,850 units in more than 20 countries.

Alpha Bank has a rich business activity in the country, with a history of more than 130 years.

The Alpha Bank-Emporiki Bank deal, following the integration of ATEbank’s healthy operations to Piraeus Bank, aims to change the domestic banking sector.
The restructuring is expected to be fully complete with decision over the future of Hellenic Postbank. The day after this restructuring, the Greek banking system will have three or four very powerful banks which will contribute in the difficult task of restarting economic growth in the country and helping in efforts to exit the crisis.
The market is now focusing on the next strategic moves by National Bank and Eurobank, the two other candidates in the sale of Emporiki Bank.


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