The Bank of Chania is optimistic about the future following the apparent collapse of its merger with the Pancretan Bank, according to its chairman Michalis Marakakis. The merger was announced in October 2021 and was approved by the shareholders of both banks, with an increase of share capital to be undertaken by Pancretan before the merger took place.
The agreement envisaged the creation of a new bank, to be named Candiabank, which would be able to compete with the country’s “big four” systemic banks, with a target for completion of the process by 31st December 2022. The distribution of shares in the new company would make 1 share in Pancretan equivalent to 6 shares in the Bank of Chania.
This now seems unlikely to proceed, following an influx of new investors into the Pancretan Bank, and what Haniotika Nea describes as the “communications fiasco” which followed, with a barrage of defamatory pronouncements made at the expense of the Bank of Chania.
Information from the financial press mentions intensive efforts by Pancretan Bank over the past few days to persuade the chairman of the Cooperative Bank of Chania (to give it its full title) to negotiate new and different terms from those which the two managements had committed themselves to, and which had received approval at General Meetings of the two banks.
Comments by the chairman and directors of the Bank of Chania
Mr Marakakis told Haniotika Nea that there was no question of revisiting the agreement. “We are not disposed to renegotiate,” he said. “We have lost confidence in Pancretan’s management. Since the day of the completion of Pancretan’s increase in share capital, we have been faced with mudslinging, defamations and inconsistencies. Given these facts there is no appetite for, or trust in a new negotiation. We never asked for collaboration and support from Pancretan, that was not our intention. We have financial indicators which are fully sufficient for the viability of the bank in the immediate future.”
Mr Marakakis’ position has received full approval from the Board of Directors. “There is complete confidence in the Management,” said Manolis Apostolakis, president of ETANAP S.A. He added that he was certain of the “developmental course of the bank, which during the period of negotiations did not need a share capital increase, by contrast with the Pancretan Bank, which needed 100 million euros.”
Mr Apοstolakis laid particular emphasis on the communication tactics recently employed by Pancretan. “I saw published statements which were untrue. You know the business world does not act like that. One cannot come out and accuse someone without evidence.” He also declared that “The bank stands firmly on its feet, it continues to move forward and we should not forget that it was this bank which stood beside the SMEs in Chania in particular, in difficult times”
The general director of MAICH Giorgos Baourakis echoed this view. “There is complete confidence in the Chairman’s approach and we know that his efforts will be for the best. The Cooperative Bank of Chania is a tool for development on a local, regional and national level and it will continue in this direction after the withdrawal of the other side.”
The mayor of Platanias Giannis Malandrakis insisted on the “capital sufficiency of the Bank of Chania which allows it to look with optimism to the future.” He noted that “there had been a methodical effort for the two banks to acquire capital sufficiency which would allow them to stand on an equal footing with the four systemic banks after the merger.” He added that it must be made clear that “it is the partner in the agreement who is withdrawing. It is they who are to blame for the failure of the merger, something which should also concern the Bank of Greece. … At the moment, the indicators show that the Bank of Chania has sufficient capital to look with optimism to the future,” he said. “Neither are there any dangerous exposures nor is there any question of its ‘going under’.”
The cancellation of the merger is now expected imminently. The process will not be a simple one, since the agreement which was signed provides for a penalty of 1 million euros to be paid by the party who is responsible for a failure to meet the prescribed schedule. (From a report in the Haniotika Nea, 14th December)
Reasons for the failure of the merger
According to the financial press, the merger ran into trouble following the increase in share capital by Pancretan. Of the offer of just under 100 million euros, the sum of 65 million euros was put up by the investment company Thrivest Holdings, thereby making it the major shareholder in Pancretan, with 32.5 per cent of the stock. That company then proceeded to look closely at Pancretan’s business arrangements, especially the merger with the Bank of Chania.
News of this action was leaked following a meeting between Pancretan and the directors of Thrivest holdings on 11th November, at which, according to press reports, the bank’s new major shareholder expressed a wish to re-examine the terms of the merger, thus provoking the angry response from the Bank of Chania which is mentioned above. Arguments seem to have revolved around the relative status of the two banks in the new company to be formed by the merger.
The Bank of Chania is a cooperative, which requires account holders also to hold a share or shares in the bank. As it has a branch in Kolymbari, there are no doubt many such people in the area and they will hopefully be reassured by the chairman’s and the board of directors’ expression of confidence in the bank’s future.
A report on Ekathimerini.com (15th December) that the Pancretan Bank has signed a memorandum of agreement with the cooperative Bank of Central Macedonia to explore the possibility of a merger, suggests that its attention is now focussed elsewhere. According to a statement from Pancretan, “The two parties will come to a negotiation and exert every effort to reach a binding agreement by Jan 31, 2023.”