During his opening statement, Mr N. Nanopoulos, Chief Executive Officer of EFG Eurobank Ergasias, stressed that this new strategic move is in line with the Group’s broader strategy to obtain increasingly larger market shares in high-growth, high-margin market segments. Moreover, he noted that the Greek capital market, unlike other developed markets, is highly fragmented. This makes the concentration of experience and technical know-how very difficult. Thus, the Group decided to undertake an initiative that would secure a leading role in the areas of brokerage, underwriting and investment banking. These are the sectors expected to present significant growth and satisfactory profitability rates in the medium term, despite the recent decline of the Athens Stock Exchange. Finally, Mr Nanopoulos concluded that: ‘our aim is to offer a complete range of services to large corporate clients, and SME’s, as well as to individual investors that seek specialised knowledge and require access to the international markets, within the framework of the EMU. The co-operation with Deutsche Bank in these areas is expected to further intensify, to the benefit of all of the Group’s clients.’ The Deputy CEO of EFG Eurobank Ergasias Mr N. Karamouzis, referred to the new business goals and prospects in view of the merger, stressing the creation of a new powerful structure with leading presence both in the local and regional markets, where it intends to further expand its activities.
According to his statements:
- In stock brokerage services, the three brokerage subsidiaries of the combined Group, that will merge, control a market share of 10.5% in the first two months of 2001, with over 200,000 individual investor accounts, over 250 institutional investor accounts, and total income of approximately Grd. 40 bn (€ 117.4 mn) in the year 2000. The three brokerage subsidiaries also maintain a leading position in the Athens Derivatives Exchange, with a combined market share exceeding 22%.
- In investment banking, the two groups jointly have over 130 signed underwriting engagements, out of a total 285 in the Athens Stock Exchange, thus commanding a market share of approximately 25%. Moreover, they jointly have over 20 consulting contracts, and 15 active relationships with pension funds. Combined income from the said activities exceeded Grd.12 bn (€35.2 mn) in 2000. EFG Telesis Finance, the investment house of the Group under creation, will consist –in total- of 65 specialised professionals of the highest quality, thus being the strongest investment banking team in the Greek market.
- In private banking, Telesis has a distinguished client base, while EFG Eurobank Ergasias and its parent group have a substantial presence in this market.
Mr Karamouzis said: ‘our intention is to offer total financial solutions to corporations, large private and institutional investors, in co-operation with Deutsche Bank; to contribute to the strengthening of our relationship with the wider public sector, by offering value-adding services; to gradually expand our geographical presence at a country-wide level; and to offer total asset management services to pension funds and other non-profit organisations.’ The stand was then taken by the President of Telesis Investment Bank Mrs Marina Efraimoglou. After making reference to the history of the foundation of Telesis in 1993, she stressed that the success of Telesis is mainly attributable to the quality of its people, the specific strategy that was gradually implemented, the love of everyone for what they were doing and, finally, to the professional ethics and honesty exhibited by everyone over the years. She further noted the multiple benefits resulting from the merger with a large banking group such as EFG Eurobank Ergasias, both to the shareholders of Telesis, because the share exchange ratio is fair and reasonable, as well as to its clients, as they will gain access to an especially efficient banking network. The benefits to the people of Telesis are also substantial, as they will now have significant development potential in the second largest private bank in Greece. She concluded saying that: ‘the great challenge for all of us is for the new organisation to be the leader with the qualities distinguishing the two banks, not only in Greece but in the broader region.’ The presentation was concluded by the Vice President of Telesis Investment Bank Mr Victor Pisante, who referred to the technical part of the merger-deal, highlighting that the relative valuation of the two banks was based on five internationally acknowledged valuation methods for financial institutions, those being: ‘discounted cash flow, market capitalisation, adjusted net worth, market ratios of comparable listed institutions, and valuation ratios of comparable transactions.’ He further noted that the merger process, which is expected to last six months, has already been assigned to two internationally acknowledged audit firms, to express an independent fairness opinion on the share exchange ratio. Mr Pisante concluded that: ‘the merger with EFG Eurobank Ergasias offers access to one of the strongest and most rapidly growing banking networks in Greece, which will allow the undertaking of large investment banking projects that require stronger capital base.’According to the procedure to be followed, the management of EFG Eurobank Ergasias SA and Telesis Investment Bank SA will propose to their respective Boards of Directors the merger by absorption of the two banks with an effective merger date of 31.12.2000 and with EFG Eurobank Ergasias absorbing Telesis. The two managements consider a share exchange ratio of 2.2 Telesis shares for each EFG Eurobank Ergasias share to be fair and reasonable and they will be proposing such share exchange ratio to the two Boards of Directors. Completion of the merger is subject to the approval of the Boards of Directors and of the General Assemblies of both banks, which will be called upon to decide subsequently to the opinion of two independent audit firms on the fairness of the share exchange ratio. Furthermore, completion of the merger is subject to the approval of all relevant supervisory authorities.
The closing price of €19.70 for EFG Eurobank Ergasias on 16.03.01 and the proposed share exchange ratio lead to a share value for Telesis of €8.95.