Piraeus Bank Secures Major Deal: Acquires 90.01% Stake in Ethniki Insurance

In a significant move to expand its financial services portfolio, Piraeus Bank, one of Greece's largest banks, has successfully sealed a deal to acquire a 90.01% stake in Ethniki Insurance, the country's second-largest insurer, from CVC Capital Partners. The transaction, valued at €600 million, marks a strategic step for Piraeus Bank to diversify its revenue streams and enhance its position in the Greek financial sector.

Background on Ethniki Insurance

Ethniki Insurance is a leading composite insurer in Greece, offering a wide range of insurance products. As of 2024, it held a market share of approximately 14.5%, with a significant presence in both life and non-life insurance segments, accounting for about 17% and 11% of the respective markets. The company boasts total assets of €4 billion and shareholders' equity of €0.4 billion as of 2023. Ethniki Insurance reported a profit before tax of approximately €100 million in 2023, adjusted for non-recurring items.

Strategic Implications for Piraeus Bank

The acquisition is expected to significantly boost Piraeus Bank's fee revenues, increasing them to about 30% from the previous year's level of around 20%. This strategic move aligns with Piraeus Bank's goal to diversify its revenue sources, enhancing value creation for shareholders while expanding its product range to cover banking, protection, and investment solutions comprehensively.

Key Benefits of the Acquisition:

• Diversification of Revenue Streams: The deal will help Piraeus Bank reduce its dependence on traditional banking activities by integrating insurance services.
• Enhanced Product Portfolio: By acquiring Ethniki Insurance, Piraeus Bank will be able to offer a broader spectrum of financial products to its customers.
• Increased Fee Revenues: The acquisition is projected to elevate fee revenues, contributing to a more stable and diversified income base.
• Improved Capital Position: The transaction is expected to enhance Piraeus Bank's capital position, with a proforma total capital ratio anticipated to reach about 18.5% in 2025, rising to nearly 20% by 2028.

Financial Impact and Projections

Piraeus Bank's financial guidance for the period until 2028 has been upgraded following the acquisition. The bank aims to achieve a Financial Conglomerate (FICO) status, which could further improve its Common Equity Tier 1 (CET1) ratio by approximately 50 basis points if successful. This status would allow Piraeus Bank to apply the Danish Compromise under the Capital Requirements Regulation (CRR), potentially enhancing its capital efficiency.

The acquisition is also expected to be accretive to Piraeus Bank's earnings per share (EPS) by about 5% and its return on average tangible book value (RoaTBV) by around 1 percentage point. This aligns with the bank's strategy to maintain competitive cost efficiency while elevating fee generation to international best-in-class levels.

Regulatory Approvals and Next Steps

The transaction is subject to regulatory approvals from the relevant authorities. Piraeus Bank has been advised by UBS Europe SE as its exclusive financial advisor, Milliman as actuarial advisor, and by legal firms Milbank LLP, Moratis Passas Law Firm, and Potamitis Vekris Lawfirm on international, local legal, and competition matters.

Conclusion

The acquisition of Ethniki Insurance by Piraeus Bank represents a significant milestone in the Greek financial sector, reflecting the bank's commitment to strategic growth and diversification. As Piraeus Bank continues to strengthen its position, it is poised to offer a more comprehensive suite of financial services, enhancing its appeal to both existing and potential customers.

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