Piraeus Financial Holdings, one of Greece’s leading banking institutions, has reached an agreement to acquire a 90% stake in Ethniki Insurance from CVC Capital Partners for €600 million.
This strategic move aims to diversify Piraeus Bank’s revenue streams and enhance its position in the Greek financial sector.
Piraeus Bank: A Brief Overview
Piraeus Bank stands among Greece’s four largest banks, offering a comprehensive range of financial products and services. The bank has played a pivotal role in the country’s economic recovery, especially after the financial crisis that began in late 2009. Following three recapitalizations, Piraeus Bank has stabilized its operations and returned to profitability. In 2024, the bank expects a net profit of €1 billion and plans to distribute 35% of its earnings to shareholders.
Ethniki Insurance: Greece’s Leading Insurer
Ethniki Insurance, established in 1891, is the largest insurance company in Greece, covering a broad spectrum of insurance products. As of 2023, the company holds a 14% market share, with 17% in life insurance and 11% in non-life insurance. Ethniki reported €800 million in gross written premiums for 2023 and possesses total assets worth €4 billion. The insurer operates an extensive distribution network, including approximately 130 sales offices, over 1,600 corporate network insurance agents, and 1,100 collaborating agencies across Greece.
CVC Capital Partners’ Involvement
CVC Capital Partners, a global private equity and investment advisory firm managing assets worth €191 billion, acquired a 90% stake in Ethniki Insurance from the National Bank of Greece (NBG) in 2021.
The firm’s initial agreement valued Ethniki at €505 million, including an “earn-out” payment of up to €120 million, contingent upon meeting specific performance targets by 2026.
Strategic Implications of the Acquisition
The acquisition aligns with Piraeus Bank’s strategy to diversify its revenue base and reduce reliance on traditional banking activities. By integrating Ethniki Insurance, Piraeus aims to increase its fee revenues from approximately 20% to 30%.
This move reflects a broader trend among Greek banks to stabilize and expand their operations following the financial crisis. The transaction is also expected to deliver substantial value to Piraeus Bank’s shareholders, further strengthening its position in the Greek financial landscape.
In conclusion, Piraeus Bank’s agreement to acquire a majority stake in Ethniki Insurance represents a significant development in Greece’s financial sector, with potential benefits for both entities and the broader economy.