WOOD Flash – Eurobank: transformational deal to frontload NPE reduction
This morning (26 November), Eurobank announced that it will proceed with a rather transformational deal, which involves the acquisition (via shares) of Grivalia, the creation of a SPV with the securitisation of EUR 7bn of NPEs, and the substantial front-loading of the SSM targets (in order to reach a 15% NPE ratio by end-2019E rather than end 2021E). This is an indirect capital issue that will enable Eurobank to: 1) substantially frontload the NPE reduction plan; and 2) acquire the best-quality REIC in Greece at below NAV. In our view, the deal is good news for Eurobank’s shareholders. Post the Grivalia merger and the SPV transaction, Eurobank will trade close to 0.4x P/TBV, i.e., a significant premium vs. its peers (Alpha at 0.23x and NBG at 0.19x on 2019E), but with considerably lower NPEs and a potential ROTE of >10% by 2020E (which implies net profit of >EUR 500m and a P/E for the combined entity of less than 4x).Eurobank Ergasias and its subsidiaries are organized in the following reportable segments: Retail. which incorporates customer current accounts, savings, deposits and investment savings products, credit and debit cards, consumer loans, small business banking and mortgages; Corporate, which incorporates direct debit facilities, current accounts, deposits, overdrafts, loan and other credit facilities, foreign currency and derivative products; Wealth Management, which incorporates private banking services; Global and Capital Markets, which incorporates investment banking services; and International, which incorporates operations in Romania, Bulgaria, Serbia, Cyprus, Ukraine and Luxembourg.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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