The Greek bank rescue fund told lenders interested in buying Credit Agricole SA’s (ACA.FR) Emporiki Bank of Greece business that a deal can only happen if the Greek unit is recapitalized first to avoid pumping taxpayers’ money into the ailing lender, two banking officials said Friday.
The Hellenic Financial Stability Fund and the Bank of Greece, the country’s central bank, have outlined this demand to each of the three Greek banks considering buying Emporiki.
“Banks interested in Emporiki have been informed that it will be recapitalized in order for the deal to go ahead,” said an official from one of the lenders interested. The official didn’t say how much the recapitalization might be.
On Wednesday, Greece’s second-largest lender, Eurobank (EUROB.AT), joined the race to buy Emporiki in what could become a three-way tussle to acquire it. It said it is examining the possibility of buying Emporiki after National Bank of Greece (NBG), the country’s largest lender, recently said it is seeking a possible strategic alliance with Credit Agricole. Meanwhile, Greece’s Alpha Bank (ALPHA.AT) has made an offer for Emporiki.
Earlier this year, the HFSF injected Greece’s top four banks–NBG, Eurobank, Alpha Bank and Piraeus Bank S.A. (TPEIR.AT)–with 18 billion euros ($22.2 billion) in cash, restoring them to solvency after taking huge losses on their holdings of government bonds due to Greece’s debt restructuring.
That capital boost will tide the banks over until they complete a formal recapitalization later this year.
Selling Emporiki would close a disastrous chapter for France’s third-largest publicly traded bank, but could come at a steep cost. Credit Agricole’s acquisition of Emporiki in 2006 saddled the French lender with billions of euros in losses and is one of the reasons its shares have plunged more than 70% over the past year, sparking uproar among shareholders.
Analysts say any sale would most likely be at a loss for the French bank which has been looking for a way out of Greece for several months.
A new recapitalization of Emporiki could also revive fears of a capital increase at Credit Agricole, say analysts. Credit Agricole has even considered walking away from the bank if Greece were to exit the euro zone, according to a person familiar with the matter, giving an idea of the lengths the French bank would potentially go to draw a line under its foray into Greece.
Greece’s banking landscape is expected to undergo changes after being hit hard by the country’s debt crisis and any acquisition of Emporiki would likely be part of that broader consolidation, suggesting a deal could be some time away.
Bidders have until Wednesday to submit an offer for Emporiki, one banking official said.
Interest from the potential buyers is seen as being strong, according to industry officials who believe that all three are likely to submit an offer in the week.
(source: Dow Jones)
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