Banking and insurance sectors to consolidate in Cyprus

Hellenic Bank is advancing on two major integration fronts, preparing for a dual merger process that will consolidate both its banking and insurance operations.

The bank’s banking sector is set to merge with Eurobank, while its insurance division will integrate with CNP Cyprus Insurance Holdings.

During a briefing with journalists at the bank’s headquarters in Nicosia, Hellenic Bank chief executive officer Michalis Louis confirmed that the transaction with CNP had received approval from the Greek supervisory authority.

He added that final approval from the French supervisory authority was expected within the coming weeks.

Once the necessary approvals are secured, the integration of the insurance business will proceed in two phases.

The first phase will involve life insurance operations while the second phase will involve general insurance operations.

At the same time, preparations for merging Hellenic Bank’s banking operations with Eurobank are progressing, leading up to the full-scale merger of the two banks.

Hellenic-Eurobank merger nears completion

During the same briefing, the bank’s executives provided insights into the unfolding developments surrounding the imminent merger between Hellenic Bank and Eurobank.

They shared that Eurobank’s public offer to acquire the remaining 6.5 per cent of Hellenic Bank’s share capital is currently in progress.

According to Louis, upon completion of the public offer, only a small percentage of shares will remain with minority shareholders, for a variety of reasons.

Eurobank is expected to exercise its squeeze-out right to acquire the remaining shares, leading to Hellenic Bank being fully owned by Eurobank by May of this year.

Regulatory approval process underway

Hellenic Bank will soon submit an application to the Central Bank of Cyprus (CBC) for approval of its merger with Eurobank, which also requires authorisation from the European Central Bank (ECB).

The approval process for the first phase of the merger, the legal merger, is expected to be completed by June.

However, Louis explained that the exact timeline will depend on regulatory authorities.

Following the legal merger, both banks will be consolidated into a single legal entity encompassing all their operations.

The second phase, the operational merger, will follow, involving a complex and intricate process. Louis said that this is expected to take approximately two to two-and-a-half years.

Four key strategic goals

Discussing the merger, Louis emphasised Hellenic Bank’s commitment to its responsibilities towards the country, economy, and society.

The Hellenic Bank CEO outlined four key objectives. The bank, he said, aims to become the largest financial institution in Cyprus.

In addition, it seeks to provide significant financing to the Cypriot economy.

He also said that the bank plans to expand internationally. He referenced India, Israel, and the Middle East, where the bank envisions its Cyprus operations as a strategic base to attract businesses and serve as a gateway to the European market for any potential investors.

Regarding India specifically, the bank explained that any investments made in that regard will be evaluated across a horizon of 3-5 years.

A phrase to describe the overall endeavour during the briefing was that “this is a marathon, not a sprint“.

During the discussion surrounding this topic, it was mentioned that improved air connectivity would contribute towards this effort.

Louis also underscored the importance of enhancing customer service, committing resources to ensure the bank becomes not only the largest but also the best in the country.

Achieving these objectives, he said, requires substantial investments in technology, processes, and human capital.

Louis highlighted that the human element would be central to the bank’s future operations.

Deputy CEO Haris Hambakis echoed these sentiments, revealing plans for significant investments in technology in the coming years.

While awaiting regulatory approvals, the bank also said that it is actively preparing for the merger by aligning processes and developing an integration plan to ensure a seamless transition.

Hambakis stressed that efforts are being made to ensure that customers experience no disruptions to the services they receive, with adequate preparation and communication for both employees and clients.

€1.3 billion investment and economic impact

Louis also highlighted the economic impact of Eurobank’s €1.3 billion investment in Hellenic Bank, noting that a significant portion of this investment has remained in Cyprus.

He stated that if these funds are utilised effectively, they could contribute to the country’s GDP.

In addition, he said that this was the largest cash investment ever made in Cyprus.

Regulatory and risk compliance

Elsewhere during the briefing, Maria Aristidou, Hellenic Bank’s Chief Compliance Officer, outlined the extensive regulatory landscape, noting that the bank operates under 900 legislative frameworks.

While compliance incurs substantial administrative costs, she stressed that it is essential to maintain the confidence of customers, investors, correspondents, employees, and regulators.

Joseph Antoniou, Chief Risk Officer, acknowledged that regulatory requirements are stringent but necessary to balance profitability with risk management.

In this context, the bank noted that competing financial service providers with abnormally low fees should alarm consumers as this may hint at corners being cut, be that in terms of compliance, data privacy, or elsewhere.

Over €200 million in digital transformation

Hellenic Bank also noted that it has invested more than €200 million in its digital transformation in recent years.

According to Christos Eojourian, Head of Technology and Digital, the bank invests approximately €50 million annually in technology, covering both human resources and system enhancements.

He also said that special emphasis has been placed on security and verification systems for electronic transactions.

Finally, Eojourian highlighted the importance of regulatory frameworks that safeguard customer data, ensuring transactions are completed securely within 15 seconds.