Alpha Bank said that Italy’s Unicredit has submitted an offer to buy its own 9% stake from Hellenic Financial Stability Fund. 

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 banks said in a joint statement. 

The two lenders decided the “establishment of a commercial partnership framework in Greece to distribute UniCredit’s asset management and unit-linked products to Alpha Bank’s 3.5 million clients and creation of a joint venture in pension-saving products with UniCredit becoming a 51% shareholder in AlphaLife,” they said in a joint statement. 

Moreover, the two entities agreed to merge their Romanian subsidiaries, 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. Alpha Bank will retain its 9.9% stake in Alpha Bank Romania. 

The merger transaction is expected to close in 2024. Upon completion, Alpha Bank is expected to receive a cash consideration of 300 million euros. The transaction issubject to the completion of a due diligence process, corporate approvals for the merger and all necessary regulatory approvals and consents, including on anti-trust.

The deal is expected to have no impact to Alpha Bank’s bottom-line  but 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.