The merger of Hellenic Bank with Eurobank Cyprus is the “ultimate goal” Eurobank CEO Fokion Karavias has said, noting the merger would yield “quite material synergies” between the two banks both in cost and revenue.

In an investor call on the occasion of the Greek bank’s financial results for 2023, Karavias said that further details concerning the merger and synergies will be provided after the completion of the bank’s public tender to Hellenic Bank’s remaining shareholders and the appointment of a new management in Hellenic Bank, Cyprus second largest lender.

According to Eurobank’s report the potential merger will create the biggest banking group in Cyprus with a balance sheet of €29 billion on the basis of the full year 2023.

So far Greek Eurobank has acquired 55.3% in Hellenic’s share capital with the acquisition subject to regulatory approval by the Central Bank of Cyprus and Cyprus’ the superintendent of Insurance. Eurobank received the green light by the Cyprus Commission for the Protection of Competition. Karavias said that the remaining regulatory approvals are expected by the second quarter. After the approval Eurobank will issue a mandatory offer to acquire Hellenic’s remaining share capital.

“In any case however it is our target to increase our stake in Hellenic Bank at a level substantially above the 55% and ultimately merge our two banks in Cyprus,” Karavias said.

Asked on potential synergies emerging from the merger, Karavias said the bank would provide more details once the tender offer is completed “and the new management of Hellenic bank undertakes its duties.”

“Let me clarify here that synergies are meaningful, are quite material and they are both in the area of costs and revenue and also in terms the MREL (minimum requirements in own funds and eligible liabilities) issuance cost which will be affected at lower levels,” he said.

Eurobank’s CEO noted that the potential higher equity participation in Hellenic as well as the cost and revenue synergies “are part of what we call the full Hellenic Bank integration.”

Hellenic’s liquidity focused in Cypriot economy

Replying to a question on the utilisation of Hellenic’s liquidity, Karavias said synergies also include the utilisation of the Cypriot bank’s liquidity, which amounts to €5.8 billion in end-2023.

He stressed however that “we are not planning to use this liquidity to other parts of Group simply because we don’t need the liquidity, as both Greece and Bulgaria are also in excess liquidity.”

“But we could deploy more liquidity by supporting the Cypriot economy or other international projects of the area in which also Cyprus is involved,” he said.

Openings to India

Furthermore, Karavias said Eurobank aims to render Greece and Cyprus as one of the gateways for Indian companies who want to invest in Europe.

“Especially Cyprus has a number of advantages and a number of similarities that Indian corporates could appreciate,” he said without giving further details as “we are in the early stages of this journey.”