In a strategic move to diversify its revenue streams, Piraeus Financial Holdings (Athens Stock Exchange: TPEIR, OTCQX: BPIRY & BPIRF) has entered exclusive talks with CVC Capital Partners to acquire a 70% stake in Ethniki Insurance, Greece’s leading composite insurer. The potential deal, valued at €469 million, could significantly boost Piraeus Bank’s position in the Greek financial sector.
The bank aims to strengthen its revenue pool through this acquisition. The bank expects the transaction to deliver substantial value to its shareholders while diversifying its income sources beyond traditional banking activities.
The proposed acquisition aligns with Piraeus Bank’s strategy to increase its fee revenues. CEO Christos Megalou previously stated that acquiring Ethniki Insurance would be instrumental in raising the bank’s fee revenues from 20% to 30% of total income.
Ethniki Insurance, currently 90% owned by CVC Capital Partners, holds a dominant position in the Greek insurance market. With a 14% overall market share, including 17% in life insurance and 11% in non-life insurance, Ethniki reported €0.8 billion in gross written premiums for 2023. The insurer’s extensive network includes 130 sales offices, over 1,600 corporate network insurance agents, and 1,100 collaborating agencies across Greece.
The potential transaction is expected to have a proforma impact of approximately 150 basis points on Piraeus Bank’s capital position, based on September 2024 figures. This would result in a capital ratio with a comfortable buffer of more than 200 basis points above the Pillar 2 Guidance. Piraeus is also considering adopting the Danish Compromise for prudential treatment of its potential stake in Ethniki Insurance, which could reduce the capital effect to less than 100 basis points.
This move comes as Greek banks continue to recover from the economic crisis that led to their nationalization following the 2009 financial meltdown. After three recapitalizations, major Greek banks have significantly reduced their bad loan ratios and achieved sustainable profitability. Piraeus Bank, which completed its full privatization in 2023, has set ambitious financial targets, projecting a net profit of €1 billion for 2024 and planning to distribute 35% of its earnings to shareholders.
The potential acquisition of Ethniki Insurance would mark one of the most significant transactions in the Greek banking and insurance markets in recent years. It underscores the ongoing consolidation and transformation of the country’s financial landscape as it emerges from a prolonged period of economic challenges.
Piraeus Bank has engaged UBS Europe SE as its financial advisor and Milliman as its actuarial consultant for the transaction. The bank has stated it will keep the investment community informed of any additional reportable events as the discussions progress.
