Hellenic Bank rumours back again in Cyprus

Hellenic Bank rumours back again in Cyprus


Future scenarios resurface

Intense activity during the past week on the shares of Hellenic Bank Public Co. Ltd. (HB) have revived talk of various scenarios regarding the bank’s future, while at the same time raising questions on the positioning of its major shareholders.
The announcement by Polys Polycarpou and related persons that their combined stake in HB increased from 4.97% to 5.06% caught market attention, but Financial Mirror investigations suggest that Polycarpou was simply reinstating his position back to last year’s levels.
At the time, Polycarpou held a 5.15% stake in HB’s capital, but this was diluted after the bank acquired 100% of Athena Investments through a share issue.
The real story seems to be elsewhere. The Financial Mirror has been monitoring the positioning of Credit Suisse First Boston (CS), that during the past few weeks has been aggressively buying shares and from a stake of around 3% last year, has increased its interest to 4%.
A year ago, CS snapped up a 3% stake in HB and a further 4% was bought by another Swiss bank, UBS AG. Financial Mirror research shows that both stakes were accumulated in HB last year at levels of around EUR 1.15. With the share price recently having declined to around EUR 1.20-1.25, CS was spotted buying.
The Financial Mirror calculates that CS bought at least 4 mln more shares lifting its total holding to 11 mln, based on movement seen on the bank’s share register.
UBS AG is holding 12.47 mln shares of HB. Among other international investors, Morgan Stanley & Co ranks 11th among the major shareholders and owns 4 mln shares.

TAKEOVER TALK
Takeover talk on HB is nothing new and has become fashionable, with Bank of Cyprus rumoured to top the list of “suspects”, while in the past Marfin Laiki Bank strongman Andreas Vgenopoulos also showed keen interest in the bank.
Informed sources say a deal between BOC and HB was close last year, but collapsed at the last minute when the Archbishop Chrysostomos II objected and did not approve the deal. Officially, all sides denied such rumours.
The Archbishopric is HB’s single largest shareholder with a 13.75% direct stake. The other major shareholders are Bank of Cyprus Group with a 5.10% stake and Universal Life with a 5.03%.
“Nobody knows who is behind the buying interest of the two Swiss banks and how those stakes (combined 8%) will be played if there is a move on HB,” said an informed source.
Many analysts insist HB makes a perfect fit for BOC, while others quash such speculation and say that with BOC busy with its Russia expansion drive, HB may become the target of a Sovereign Wealth Fund or wealthy foreign investors keen to get a foothold in an EU bank.
Hellenic Bank insiders, meanwhile, hotly deny that there is any deal in the making, insisting that the bank is keen to continue on its current path of steady expansion and organic growth after HB received license to commence operations in Russia last year.
The keen interest by foreign and local investors to buy and hold their stakes in the bank is described by HB insiders as evidence that investors have full confidence in the management team headed by Makis Kervanos (whose contract was recently renewed), amid expectations that the situation in Greece has at last turned for the better.
Hellenic Bank’s conservative lending policies over the years, which saw it lose some market share to others, also appears to support the management, since HB’s non-performing loans are expected to be lower this year.

GOOD PERFORMANCE
The ordinary shareholders of HB, meanwhile, are very happy at the buying interest shown by foreign and local investors in the bank since it has shielded HB’s share price from losses.
In fact, while the share price of BOC and MPB are down by 10% on average since the beginning of 2010, the share price of HB is up 5%.
Based on the nine-month 2009 results, HB’s share price is trading at a price to book value of 0.78 times, which indicates the share price, currently trading at EUR 1.25, is around 25% undervalued compared to its book value of EUR 1.62/share.
HB will report its 2009 preliminary results on February 25.

Financial Mirror

Payrolls Probably Rose at Start of Year: U.S. Economy Preview

Payrolls Probably Rose at Start of Year: U.S. Economy Preview

Jan. 31 (Bloomberg) -- The U.S. may have gained jobs in January for the second time in three months as the world’s largest economy began 2010 on firmer footing, economists said before reports this week.

Payrolls probably rose by 13,000 workers this month, according to the median forecast of 50 economists surveyed by Bloomberg News before the Labor Department’s Feb. 5 report. The unemployment rate may have held at 10 percent for the third consecutive month.

The fastest pace of economic growth in six years last quarter may give rise to more employment gains as companies restock shelves and invest in new equipment. While the U.S. will probably take years to recover the 7.2 million jobs lost since the recession began at the end of 2007, additional hiring would be welcome news to President Barack Obama, who said job creation will be his top priority in 2010.

“It’s still quite feeble job growth,” said Michelle Meyer, an economist at Barclays Capital Inc. in New York, who forecast a 25,000 gain in payrolls. “We do think the trend will be toward greater job creation.”

Oracle Corp. and General Electric Co. are among companies looking to hire.

Payrolls fell by 85,000 last month after a 4,000 gain in November that was the first increase in almost two years.

Economy Expands

The U.S. economy expanded in the fourth quarter at a 5.7 percent annual rate, exceeding the median estimate of economists surveyed by Bloomberg News and the best performance since the third quarter of 2003, figures from Commerce Department last week showed.

The jobless rate held at 10 percent in December, restrained by a drop in the labor force as the number of discouraged workers climbed, figures from the Labor Department on Jan. 8 showed. The unemployment rate is forecast to average 10 percent this year, according to the median estimate of economists surveyed this month.

Obama last week said job creation will be the “number one focus in 2010.” Speaking during his first State of the Union address, he called on Congress to deliver a new jobs bill to his desk.

January marks the one-year anniversary of the country’s biggest single-month employment plunge in six decades, showing the economic expansion that began in last year’s third quarter has slowed the pace of job cuts. The U.S. lost 741,000 jobs last January, according to Labor Department figures.

More Hiring

Oracle, completing the acquisition of Sun Microsystems Inc. last week, will hire 2,000 salespeople, President Charles Phillips said on Jan. 27. He said the hiring of new employees, who will sell Sun’s products directly to Oracle’s biggest customers, will start immediately.

General Electric is hiring workers in energy, health care and rail transportation in part because global economic-stimulus policies have created demand, two executives said last week. GE is bidding to supply new passenger locomotives for Amtrak, and in November announced a joint venture in China that would make high-speed rail locomotives that may add 200 U.S. jobs

“We will create jobs in the United States that could not have been created any other way,” John Rice, chief executive officer of GE Technology Infrastructure, said in an interview with Bloomberg Television from Davos, Switzerland, last week.

Factory Expansion

Manufacturing probably expanded in January for a sixth straight month, economists said before a report from the Institute for Supply Management tomorrow. The Tempe, Arizona- based group’s factory index climbed to 55.5 from 54.9 in December, the survey showed. Readings greater than 50 signal expansion.

Factories are helping lead the economic recovery, and orders for manufactured goods are forecast to increase in December for a fourth straight month, according to the median estimate of economists surveyed. The 0.5 percent gain projected ahead of a Feb. 4 report from the Commerce Department would follow a 1.1 percent rise in November.

Americans probably increased spending in December for a third month as earnings grew, economists said before a report tomorrow from the Commerce Department. Household purchases rose 0.3 percent after climbing 0.5 percent in November, according to the survey median. Incomes gained 0.3 percent following a 0.4 percent increase, the survey showed.

Commercial Slump

Commercial building projects remain a weak spot for the economy. The Commerce Department tomorrow is expected to report construction spending declined in December for an eighth consecutive month, according to economists surveyed. The projected 0.5 percent drop would follow a 0.6 percent decrease the prior month.

The number of contracts to buy previously owned U.S. homes probably rose in December after plummeting 16 percent the previous month, the survey median showed before Feb. 2 figures from the National Association of Realtors. The extension of a government tax credit for homebuyers is likely to boost sales, economists said.

The Standard & Poor’s Supercomposite Homebuilder Index has increased 5.4 percent since the beginning of the year, compared with a 3.7 percent decrease for the S&P 500 Index.



Bloomberg Survey

================================================================
Release Period Prior Median
Indicator Date Value Forecast
================================================================
Pers Inc MOM% 2/1 Dec. 0.4% 0.3%
Pers Spend MOM% 2/1 Dec. 0.5% 0.3%
PCE Deflator YOY% 2/1 Dec. 1.5% 2.2%
Core PCE Prices MOM% 2/1 Dec. 0.0% 0.1%
Core PCE Prices YOY% 2/1 Dec. 1.4% 1.5%
ISM Manu Index 2/1 Jan. 54.9 55.5
ISM Prices Index 2/1 Jan. 61.5 62.4
Construct Spending MOM% 2/1 Dec. -0.6% -0.5%
Pending Homes MOM% 2/2 Dec. -16.0% 1.0%
ISM NonManu Index 2/3 Jan. 49.8 51.0
Productivity QOQ% 2/4 3Q 8.1% 6.0%
Labor Costs QOQ% 2/4 3Q P -2.5% -2.5%
Initial Claims ,000’s 2/4 23-Jan 470 455
Cont. Claims ,000’s 2/4 16-Jan 4602 4577
Factory Orders MOM% 2/4 Dec. 1.1% 0.5%
Nonfarm Payrolls ,000’s 2/5 Jan. -85 13
Unemploy Rate % 2/5 Jan. 10.0% 10.0%
Manu Payrolls ,000’s 2/5 Jan. -27 -23
Hourly Earnings MOM% 2/5 Jan. 0.2% 0.2%
Hourly Earnings YOY% 2/5 Jan. 2.2% 2.2%
Avg Weekly Hours 2/5 Jan. 33.2 33.2
Cons. Credit $ Blns 2/5 Dec. -17.5 -9.5
================================================================

bloomberg