By Stelios Orphanides
AstroBank, the lender that emerged from the acquisition of a majority stake in the Cypriot unit of Greece’s Bank of Piraeus, will consider opportunities to acquire assets in an attempt to implement its growth strategy, its top executive said on Monday.
The acquisition took place last year by a group of investors led by Lebanese banker Maurice Sehnauoui.
“Following the launch of AstroBank we are moving from a deleveraging strategy imposed by events in Greece to a ‘grow and the-sky-is-the-limit’ approach,” chief executive officer George Appios said in a telephone interview. “The new owners’ philosophy is that we are no longer constrained by capital and liquidity. This a 180-degree change in the strategic direction”.
The bank, which inherited a balance sheet slightly exceeding €1bn, is in position to buy other competitors or assets from other banks, and will do so if an opportunity arises at the right price, he said.
Appios declined to confirm or deny information that AstroBank was showing interest in acquiring the Cyprus business of National Bank of Greece.
“We will also examine everything that comes along our path as an opportunity in terms of acquisition,” he said. “Even acquiring of loans from other banks will be looked at as an opportunity that will be examined on a cost and benefits basis”.
Following the acquisition for reportedly €3.2m and the subsequent capital increase of €40m, AstroBank – so named because Sehnaoui considers the island the ‘star of the Mediterranean’ because of its economic achievements and shape – business development and growth will be the bank’s top priorities, Appios said.
And as a Cypriot bank, AstroBank may seek to have its share listed on the Cyprus Stock Exchange, which could happen in two years at the earliest, Appios said.
“The first thing we need to do and make the difference in the bank is to ensure that we capitalise on our advantages and have the best time to respond in the market,” the banker said. “We have to give our customers answers to their loan requests swiftly and we need to be the fastest compared to our competitors. The responses should not just be quick, they should be relevant”.
“We are small and agile and we can take decisions quickly as we don’t have to go to an overseas head office or through a large number of hierarchical levels to get approvals,” Appios said. “This ensures that decisions will not only be quick but also relevant to what the client needs”.
To do that, the bank, its management and staff alike, will have to “change the culture” in order to think “innovatively” on behalf of the customer.
Under the terms of the deal, Bank of Piraeus retains a 17.6 per cent stake and the responsibility to provide technical support to AstroBank. The lender announced a new board of directors in February that includes Shadi Karam, a former banker at Merrill Lynch and Lebanon’s BLC Bank.
AstroBank can utilise “the blend of local knowledge and experience combined with the depth of experience of the new investors in international banking with a large network of business contacts,” Appios said.
That blend will be necessary to reduce the bad loan portfolio AstroBank inherited from the Cypriot subsidiary of Bank of Piraeus, which is another pressing priority. The lender has a 90-days-past-due loan ratio of 39 per cent and a non-performing loan slightly above that, the bank’s CEO said.
“The change in the direction of the bank does not alter the targets regarding the reduction of non-performing loans,” Appios continued.
The reduction of Cyprus’s non-performing loan mountain, roughly half of the banks’ portfolio, which all rating companies consider necessary for Cyprus to improve its sovereign credit rating, could create a vicious circle, Appios said.
After implementing reforms included in the adjustment programme agreed with international creditors four years ago, “there is one thing that we have not completed, which is to reform the public sector which is my only concern,” Appios said.
“Those things that we have not reformed may ultimately negatively ruin what was reformed and affect the sustainability of economic growth” which faces external challenges related to energy prices, regional geopolitics and Greece’s economy, he said.