Moody’s Optimistic on Hellenic Bank’s Prospective Insurance Acquisition
In a recent bulletin, international credit rating agency Moody’s has expressed a favorable outlook on Hellenic Bank’s intended acquisition of CNP Insurance operations in Cyprus and Greece. This strategic move is anticipated to diversify the bank’s revenue sources and reduce its reliance on interest-based income.
The acquisition, which is contingent on the green light from regulatory bodies, could propel Hellenic Bank to the forefront of the Cypriot insurance market. With a purchase price of €182 million, equating to a 1x acquisition multiple of the bank’s book value, Moody’s underscores the deal’s financial prudence. The acquisition is expected to have a capital impact of around 2.6 percentage points, bolstering the group’s capital adequacy to an impressive adjusted ratio of 25.8 percent.
Moody’s anticipates that the bank will recoup the acquisition cost through retained earnings, citing the bank’s robust profitability and current policy of not distributing dividends. The deal also includes the transition of 330 CNP employees to Hellenic Bank.
With CNP Cyprus holding significant market shares in both life and general insurance sectors, this acquisition would significantly enhance Hellenic Bank’s position in these areas. The bank’s existing insurance subsidiaries, Hellenic Life and Pancyprian, would benefit from an expanded market presence.
The transaction is not just about market share; Moody’s projects that it will also bolster Hellenic Bank’s revenue diversification. The bank’s current dependency on net interest income, which stands at 80 percent of total revenue, is higher than that of its competitor, the Bank of Cyprus. The addition of CNP Insurance is expected to balance this by adding substantial insurance activity revenue.
Furthermore, Moody’s foresees potential synergies and product distribution opportunities post-acquisition. Hellenic Bank would gain access to a larger customer base of 160,000 individuals and offer a broader spectrum of insurance and wealth management products to both new and existing clients. This strategic expansion is set to redefine the landscape for health insurance providers and
