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Moody's: Gives a positive sign to Hellenic Bank after the agreement with CNP

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Moody’s: Βζει θετικ&pi ;ρσμο Ελκor Τραπεμε τη σφνε τηCNP

The prospects are positive for Hellenic Bank with the expected acquisition of CNP Cyprus Insurance, according to what the rating agency Moody's states in its related report.

In the report of the rating agencyMoody's reports that on April 25, Hellenic Bank announced exclusive negotiations with CNP Assurances for the acquisition of its activities in Cyprus and Greece, through its subsidiary CNP Cyprus Insurance Holdings Limited. The acquisition will be credit-positive for Hellenic Bank as it will allow it to diversify its franchise and revenue streams, increasing its non-financed income and reducing reliance on interest rates. It will also make Hellenic Bank a leader in the Cypriot insurance market. The transaction, which is subject to regulatory, competition authority and other approvals, is expected to close by the first quarter of 2025.

As part of the transaction, CNP Assurances has a put option, which the firm expects to exercise once all approvals are received, and Hellenic Bank is irrevocably committed to acquire CNP Cyprus if that option is exercised. The total cost of the acquisition is expected to amount to €182 million, which will reduce the bank's overall capital adequacy by 2.6 percentage points to the still stable pro forma 25.8%, upon completion. p>

However, the house emphasizes in its report that, “we expect this to be recovered through earnings, because profitability remains strong and the bank does not currently pay dividends. The deal is likely to include CNP Cyprus' 330 employees.

CNP Cyprus is Cyprus's second largest life insurance providerwith a combined market share of 24% of domestic gross premiums, behind Bank of Cyprus Public Company Limited (Baa3 positive, ba2) subsidiary Eurolife Ltd, and the largest non-life insurance provider, with a market share of 15% in 2023. The potential acquisition will boost the overall franchise of Hellenic Bank with market share reaching 30% in life insurance and 23% in non-life insurance, including the existing insurance brands of Hellenic Bank, Hellenic Life Insurance Company Ltd and PanCyprian Insurance Limited.

< p>This transaction will also strengthen the diversification and sustainability of Hellenic Bank's profitability. The bank, which reported total profits of €365m in 2023, will boost its insurance-related income, reducing its reliance on net interest income, which accounts for 80% of its total income, to compared to domestic peer Bank of Cyprus, which had a lower reliance at 72% in 2023.

The bank's combined larger insurance operations will benefit from cost synergies. In addition, the acquisition will create cross-selling opportunities because it will acquire a large number of insurance customers while being able to offer CNP Cyprus' insurance and products to its existing banking customers.

Source: www.philenews.com

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