The puzzle concerning the sale of an 80% percent stake in National Insurance will be finally solved in October. The management of National Bank (NBG) is examining in detail a proposal from CVC and a board meeting is expected to be convened in order to make a final decision.
With the EU Competition Commission, through a letter from President Margrethe Vestager to the Insurance Workers' Union, indicating that there will be no further extension given to the sales process, everything shows that the sale to CVC is the most likely option.
In the letter, Vestager notes that the disinvestment of National Bank from its subsidiary has been a commitment of the Greek government and National Bank for years, that DG Comp has given extensions to. It also points out that the Commission is not involved in the process, referring the union to the government and National Bank.
Under these circumstances, any plan B that may have been considered is off the table as there is not enough time for a new tender announcement, nor for holding an IPO, and the only option is to sell it to CVC, with National Bank pushing for an improved offer.
Sources say that Fosun also has an eye on the process, however, with time pressing it is unlikely that it will be given time to bid. According to the same sources, however, interest from the Chinese group remains strong, as the lack of an offer being submitted in early March is due to the general lockdown that was imposed in China in February, affecting the smooth operation of the company.
It is noted that the divestment from National Insurance had been proposed by Greece as early as 2014 as a means of providing state aid to NBG. National Bank has promised the sale of its insurance subsidiary to European authorities under the 2019 Revised Restructuring Plan. National Bank is subject to EU rules on state aid in relation to the assistance received from the HFSF and the Greek State in the context of the 2015 recapitalization.
The restructuring plan was approved by the European Commission in May 2019 and includes a series of commitments on specific measures and actions that need to be completed by the end of this year.
In the last tender held in the summer, US fund CVC offered about 480 million euros, in a bid that was not approved by the parent bank, as the minimum price was estimated at around 700 million euros. However, the recent offer is still below expectations, coming in at less than 450 million euros.
At the same time, the National Bank proceeded to reduce the value on the basis of which it values National Insurance on its books, recording in 2019 earnings an extraordinary loss of 500 million euros, a fact that shapes its value at some 650 million euros.
The effects of the Covid-19 pandemic also had a negative effect on the profitability of National Insurance, with pre-tax profits in the first half of 2020 amounting to 17.5 million euros compared with 25.5 million euros in the corresponding half of 2019, a decrease mainly due to the further fall in interest rates used to discount insurance reserves.