WOOD Flash – Piraeus Financial Holdings: first take on potential Ethniki acquisition

Piraeus announced yesterday (6 February) that it has entered exclusive talks with CVC to acquire 70% of Ethniki Insurance, Greece’s largest insurer. While Ethniki’s 2024E financials are not out yet, based on the company’s 2023 adjusted ROTE and the announced EUR 469m price tag for 70% of the company, we estimate that Piraeus will pay between 8-9x P/E and 1.3-1.6x P/TBV for 2024E. According to Bloomberg, Piraeus is trading at 0.65x P/BV and 5.3x P/E multiples for 2024E. The bank expects a CET1 impact of less than 100bpts and does not anticipate altering its capital return plans (a 35% payout from 2024E and a 50% payout from 2025E) due to the deal. We calculate a 4% EPS accretion from the acquisition. Although the pricing does not suggest that Ethniki is a home-run acquisition, we believe that Piraeus is positioning itself for the long-term growth potential of non-deposit savings products, and wants to rely less on interest income. We rate Piraeus a HOLD, with a PT of EUR 4.1.