The privatisation committee for CEC Bank has set the final terms of the sales contract, which should now be submitted to the government for final approval. Following approval by the government, the terms of sale will be sent to the bidders (OTP Bank and National Bank of Greece), which will have an opportunity to submit improved financial offers. No further details on the expected timeline for the privatisation were provided.
Our view: We view the gradual progress being made towards the privatisation of CEC positively, though the news today isn't expected to have any trading impact. Though it has been delayed numerous times, the conclusion of the CEC privatisation process remains an important event on the horizon for OTP Bank. The possibility of a new share issue to fund the potential acquisition of CEC has weighed on the stock price, though management has indicated that it considers its chances of winning the bidding contest as not very high.
The final price for CEC is rumoured to range between EUR 500m and EUR 700m, suggesting a price-to-book ratio of 4.5x - 6.3x. Given the level of restructuring required and the bank's limited profitability, we would expect a price towards the low end of this range.