UniCredit and Alpha Bank announce merger in Romania and strategic partnership in Greece

UniCredit S.p.A and Alpha Services and Holdings S.A. - 100% parent of Alpha Bank S.A. - on Monday announced the signature of a binding term-sheet for the creation of a strategic partnership in Romania and Greece. 

Merger of Romanian subsidiaries 

The parties have agreed the key economic terms for the merger of UniCredit Romania with Alpha Bank Romania S.A., to create the third largest bank in the local market with a combined 12% market share by total assets. The merger combines two complementary franchises in a high growth country, with UniCredit Romania and Alpha Bank Romania having strong footholds in the corporate and retail segments. Transaction closing is expected in 2024, subject to the completion of a due diligence process, corporate approvals for the merger and all necessary regulatory approvals and consents, including on anti-trust. Upon completion, Alpha Bank is expected to retain 9.9% of the combined entity share capital and receive a cash consideration of 300 million euros. The cash component remains subject to post due diligence adjustments related to asset quality, if applicable.

The merger will grant customers of Alpha Bank Romania access to an enlarged range of services and products; and both parties will ensure continuity and quality of service to their clients throughout the period of transition. 

UniCredit and Alpha have agreed key terms for:

a) the purchase by UniCredit of a 51% stake in AlphaLife Insurance Company S.A. (" AlphaLife”), a wholly-owned life insurance subsidiary of Alpha active in the pension and savings products segment;

b) the distribution of UniCredit onemarkets mutual funds through the Alpha Bank network, which serves more than 3.5 million clients in Greece. This cooperation will leverage UniCredit’s expertise and breath of products in the asset management and in the bancassurance space to accelerate the development of AlphaLife’s capabilities and enrich the wealth management offering available to Alpha Bank’s customers. It is an example of UniCredit’s factories adding value to third parties and a demonstration of its commitment to being the Bank for Europe’s future by distributing its best-in-class products into new markets. The parties will also explore further collaboration opportunities. The final agreement on the commercial partnership is subject to completion of a due diligence process, corporate approvals and all necessary regulatory approvals and consents, including on anti-trust. 
 

UniCredit has submitted an offer to the Hellenic Financial Stability Fund (" HFSF”) to purchase, in accordance with the HFSF divestment strategy and procedures, all the shares the HFSF currently holds in Alpha, equal to 9%. The transaction will have a negligible impact on UniCredit’s CET1 ratio. If the process with the HFSF is not completed, UniCredit has committed to purchase on market an equity stake equal to the lower of 5% or a different percentage of shares which results from UniCredit investing an aggregate pre-agreed amount over a period of 24 months. The benefits of a long-term strategic partnership across geographies and products The transaction will enable UniCredit to enhance its presence in Romania, a high growth potential country, and expand its product and platform reach to Greece, a country with strong growth prospects. 

The partnership with UniCredit supports Alpha Bank’s strategy and underpins its franchise value, with the enhanced product offering accelerating the delivery of its business plan targets. It will further enhance Alpha Bank’s customer servicing capabilities, through sharing of know-how and leveraging on UniCredit’s products and long-standing presence in the home markets of Italy and Germany as well as its Central European and Eastern European franchise. The Romanian merger will have an impact on UniCredit’s CET1 ratio of around 15 basis points and, together with the commercial partnership centred around UniCredit’s factories, is expected to add, on a run rate basis, above Euro 100 million in incremental net profit to UniCredit. For Alpha Bank, the overall transaction leaves net profit expectations unchanged, further enhancing its capital buffers by more than 100 basis points, thus leading ROTE higher by at least 50 basis points, with upside potential from the commercial transaction.

BoG governor welcomes deal

Bank of Greece's governor Yannis Stournaras, commenting on the merger deal between UniCredit and Alpha Bank said: "The Bank of Greece welcomes the deal, the first significant strategic agreement between a large European bank and a Greek systemic bank after the financial crisis of the previous decade. This deal reflects the increased credibility of the Greek economy in the last few years, certified by four credit rating firms so far which offered an investment grade rating to Greek state bonds. It also reflects the significant progress made in the Greek financial system. Both banks deserve congratulations for the systematic job they did to reach this significant agreement, which does not cover just Greece and Italy but the whole of the Eurozone."

Economy and Finance Minister Hatzidakis

After several years a large European bank is again investing in the Greek banking system, National Economy and Finance Minister Kostis Hatzidakis said in a statement, commenting on the merger deal. "The government welcomes the decision by UniCredit to invest in Alpha Bank," Hatzidakis said. The fact that a large European bank was investing in the Greek banking system, he added, was proof that both the banking system and the Greek economy have entered a course of good prospects and growth. 

"This positive development is the result of systematic work, which the government is determined to continue," Hatzidakis noted.