Hellenic Bank’s Merger with Eurobank Enters Final Phase as Cyprus Banking and Insurance Sectors Consolidate

Hellenic Bank is making significant strides in a dual integration process that will see both its banking and insurance operations undergo mergers.

The bank’s financial division is in the process of merging with Eurobank, while its insurance business is set to integrate with CNP Cyprus Insurance Holdings.

During a media briefing held at Hellenic Bank’s headquarters in Nicosia, Chief Executive Officer Michalis Louis confirmed that the transaction with CNP had already secured approval from the Greek supervisory authority. He further stated that the final approval from the French supervisory authority is anticipated within the coming weeks.

Following the necessary approvals, the insurance business integration will take place in two stages. The initial phase will cover life insurance operations, while the subsequent phase will focus on general insurance operations.

Meanwhile, preparations for the merger of Hellenic Bank’s banking operations with Eurobank are progressing, paving the way for a full-scale consolidation of the two financial institutions.

Hellenic-Eurobank Merger Nears Completion

Providing further insight into the banking sector merger, Hellenic Bank executives discussed the developments surrounding the imminent integration of the two banks. They revealed that Eurobank’s public offer to acquire the remaining 6.5 per cent of Hellenic Bank’s share capital is currently underway.

According to Louis, upon completion of this public offer, only a minor percentage of shares will remain in the hands of minority shareholders for various reasons. Eurobank is expected to exercise its squeeze-out right to acquire the remaining shares, which would result in Hellenic Bank becoming fully owned by Eurobank by May of this year.

Regulatory Approval Process Underway

Hellenic Bank is preparing to submit an application to the Central Bank of Cyprus (CBC) for approval of its merger with Eurobank, a process that also necessitates authorization from the European Central Bank (ECB).

The approval process for the legal merger, which marks the first phase of integration, is anticipated to conclude by June. However, Louis emphasized that the exact timeline remains subject to the decisions of regulatory authorities.

Once the legal merger is finalized, both banks will be consolidated into a single legal entity encompassing all operations. The operational merger, forming the second phase, is expected to be an intricate and comprehensive process, projected to take approximately two to two-and-a-half years.

Four Key Strategic Goals

Discussing the merger, Louis underscored Hellenic Bank’s dedication to its responsibilities towards the country, economy, and society.

The Hellenic Bank CEO outlined four key objectives:

• The bank aims to become the largest financial institution in Cyprus.

• It seeks to provide significant financing to the Cypriot economy.

• It plans to expand internationally, with a strategic focus on India, Israel, and the Middle East. The goal is to position Cyprus as a hub that attracts businesses and serves as a gateway to the European market for potential investors. Specifically regarding India, the bank explained that investments in this region will be evaluated over a period of three to five years.

• Louis stressed the importance of enhancing customer service, ensuring that the bank not only becomes the largest but also the best in Cyprus.

“This is a marathon, not a sprint,” was a phrase frequently referenced during the briefing. Improved air connectivity was also cited as a contributing factor towards this effort.

Louis further noted that achieving these objectives requires substantial investments in technology, processes, and human capital, emphasizing that the human element will remain at the core of the bank’s future operations.

Echoing these sentiments, Deputy CEO Haris Hambakis revealed that significant investments in technology are planned for the coming years. While awaiting regulatory approvals, the bank is actively aligning internal processes and developing an integration plan to ensure a seamless transition.

Hambakis reassured that extensive efforts are being made to prevent service disruptions for customers, with adequate preparation and communication strategies being implemented for both employees and clients.

€1.3 Billion Investment and Economic Impact

Louis also highlighted the economic impact of Eurobank’s €1.3 billion investment in Hellenic Bank, emphasizing that a substantial portion of this investment remains in Cyprus.

He stated, “If these funds are utilized effectively, they could contribute to the country’s GDP.”

Additionally, he noted that this marks the largest cash investment ever made in Cyprus.

Regulatory and Risk Compliance

During the briefing, Maria Aristidou, Hellenic Bank’s Chief Compliance Officer, outlined the extensive regulatory framework under which the bank operates, stating that it adheres to approximately 900 legislative frameworks.

While acknowledging that compliance entails significant administrative costs, she stressed, “It is essential to maintain the confidence of customers, investors, correspondents, employees, and regulators.”

Joseph Antoniou, Chief Risk Officer, also addressed regulatory requirements, stating that although they are stringent, they are necessary to balance profitability with risk management.

In this context, the bank cautioned that financial service providers offering abnormally low fees should raise concerns among consumers, as this could indicate a compromise in compliance, data privacy, or other critical areas.

Over €200 Million in Digital Transformation

Hellenic Bank also emphasized its commitment to digital transformation, revealing that it has invested over €200 million in this sector in recent years.

According to Christos Eojourian, Head of Technology and Digital, the bank allocates approximately €50 million annually to technology, which covers both human resources and system enhancements.

Eojourian also noted that a strong emphasis has been placed on security and verification systems for electronic transactions.

He concluded by highlighting the importance of regulatory frameworks designed to safeguard customer data, ensuring that transactions are completed securely within 15 seconds.

By fLEXI tEAM