Hellenic Bank and Eurobank Cyprus will continue to operate separately until conditions are ripe for the potential merger of the two banks, Eurobank Group CEO Fokion Karavias has said.

The Greek banking Group, the largest share-holder of Hellenic Bank, Cyprus’ second largest lender, aspires to create the biggest banking institution on the island via the merger of the two banks, which feature two different but complementary business models, he said.

In a meeting with Cypriot journalists in Athens, Karavias said Eurobank’s investment in Hellenic Bank constitutes “a vote of confidence” to the prospects of the Cypriot economy as well as perhaps the largest investment in cash, estimated to reach €800 million.

The acquisition of Hellenic is considered as a key driver for Eurobank’s strategic goal to generate 50% of its profits via its foreign banking operations by 2026.

So far, Eurobank has acquired 55.3% of Hellenic’s share capital, a qualified holding subject to regulatory approvals by the ECB and the local regulator, the Central Bank of Cyprus, expected in the second quarter. Following the approval the Eurobank group, under Cypriot law will submit a mandatory public offer to acquire Hellenic’s remaining shares.

Karavias said the offer is expected to be submitted by the end of Q2, without providing any timeframe for the Greek group’s next moves in view of discussions with Hellenic’s remaining major share holders, namely Demetra Holdings Plc, which holds 21% of Hellenic’s share capital.

“We must agree with the remaining shareholders on a possible timeframe and on when we could proceed on such a move,” he said responding to a question on the potential merger of the two banks.

“Therefore, our plan is to proceed with the separate operation of the two banks. When and if conditions are ripe, of course we are not hiding that our wish is to proceed with the merger, because we would have a more efficient operation, but this is not solely up to us, we should proceed in collaboration with Hellenic’s other share-holders,” he added.

On Eurobank group’s decision to invest in Cyprus and Hellenic Bank, Karavias said Hellenic is a very good bank, with high capital ratios and ample of liquidity and a strong footprint on the island’s retail banking sector, whereas Eurobank Cyprus is a bank focusing on corporate and private banking and treasury operations.

He also reiterated that the Group aims to utilise Hellenic Bank’s excessive liquidity in lending in Cyprus as well as financing large strategic projects on the island such as the €1.9-billion electricity interconnection between Cyprus, Greece and Israel (Great Sea Interconnector).

Moreover, he stated that Eurobank aims to establish Cyprus as a gateway for the “dynamic economies” of the Middle East region and India, building on Cyprus’ advantages such as the common company law, low and stable tax framework and its developed professional services sector and the double taxation treaty agreed with India.