Eurobank absorbs bank in Serbia

Agreement for the merger of its subsidiary in Serbia Eurobank a.d. Belgrade with Direktna Banka a.d. Kragujevac, by absorbing the latter, was signed by the Eurobank group

This is the first expansionary move abroad made by a Greek bank since the late 2000s, with the acquisition of a credit institution that does not belong to a domestic group.

The new scheme (“Eurobank Direktna”) will have total assets over 2 billion euros, total equity over 300 million euros and, after the full implementation of the estimated synergies, pre-forecasts and net profits over 50 million. EUR 35 million and EUR 35 million respectively.

Earnings per share to increase by 3% after the implementation of synergies. The consolidated bank’s market share will exceed 6.5%, based on total loans, making it the seventh largest bank in Serbia.

Shareholder composition

Upon completion of the transaction, Eurobank will control approximately 70% of the consolidated bank, while Direktna shareholders will hold the remaining 30%.

The transaction also includes the payment of a dividend / refund to Eurobank.

Both sides are committed to a growth-oriented business plan, incorporating ambitious growth goals that will allow the merged bank to finance the Serbian economy and grow profitably in the coming years.

According to the management of Eurobank, the transaction is in line with its strategy to further strengthen its position in the countries where the Group is present and further growth with additional acquisitions and friendly mergers.

Mr. Stavros Ioannou, Deputy Chief Executive Officer, Group Chief Operating Officer (COO) & Head of International Operations of Eurobank, stated that “the merger of the two banks in Serbia achieves the creation of a much stronger, larger, and more dynamic local financial institution.”

According to him, “this transaction is in line with Eurobank’s strategy to further expand its international operations and create added value for its shareholders through targeted acquisitions, mergers or joint ventures.”

He added: “We are excited about our cooperation with two excellent Serbian businessmen, Andrej and Bojan, and we are confident of the success of our ambitious projects in Serbia. The merger of Eurobank Serbia with Direktna has substantial advantages for all stakeholders of the consolidated bank, including retail and business banking customers, depositors, employees and regulators.”

Mr Andrej Jovanović and Mr Bojan Milovanović, shareholders of Direktna, commented:

“This merger is a clear opportunity to enhance the profitable growth we have achieved with Direktna. We believe that Eurobank Direktna will have a unique opportunity to take advantage of the strong institutional background and size that our partners bring from Eurobank and our deep knowledge of the domestic market.

The combination of people and our specialized knowledge will make Eurobank Direktna a bank of choice in the Serbian market. “We are excited about our agreement and look forward to unlocking all the synergies that this merger will bring.”

It is noted that the completion of the transaction is subject to routine approvals by the competent regulatory and supervisory authorities and is expected to take place in the last quarter of 2021.

BNP Paribas acted as the sole financial advisor to Eurobank Serbia for the Transaction, while Milbank LLP, the law firm Živković Samardžić and Moravčević Vojnović in cooperation with Schoenherr provided legal assistance.

The only Greek bank in Serbia

According to the bank’s circles, Eurobank is the only Greek bank that has a presence in Serbia, where in the past all the current Greek systemic banks had subsidiaries.

Eurobank’s strengthening in the Serbian market follows similar moves in Bulgaria, where the Eurobank subsidiary acquired Alpha Bank Bulgaria in 2016 and Piraeus Bank Bulgaria in 2019.

Following the merger, the new bank will be the 7th in Serbia in total assets, 7th in loans and 8th in deposits.

It will have assets of more than 2 billion euros, a loan portfolio of more than 1.5 billion euros and will be fully self-financed with excess liquidity and deposits of about 2 billion euros.

They also emphasize that Eurobank is the Greek bank with strong international operations activities and a distinct presence in the wider geographical region. The Group is present in five countries outside Greece (Bulgaria, Cyprus, Serbia, Luxembourg and Britain). It has the 3rd largest bank in Bulgaria (Postbank) and the leading corporate bank in Cyprus (Eurobank Cyprus) and a specialized in private banking and wealth management subsidiary, Eurobank Private Bank Luxembourg. 30% of the basic pre-forecast income of the Group comes from the above international activities.