Concerns on possible insider dealing as Greek Bank rallies 70% before HSBC Malta deal disclosure

CrediaBank SA shares traded on the Athens Stock Exchange surged inexplicably during the four weeks before the 15 August official announcement by HSBC naming the bank as its preferred bidder for the acquisition of its majority shareholding in Malta’s second-largest bank.

While trading in CrediaBank shares on the Athens Stock Exchange was sluggish and hovered around an average of €0.80c per share throughout the first six months of the year, between 8 July and 15 August – the period when negotiations were being held until a final announcement was made – turnover increased significantly, pushing up the bank’s share price to €1.40 on the day of the announcement (14 August).

It remains unclear what caused the investors’ frenzy over the shares of the Greek bank, as the negotiations were supposed to be confidential and insider trading is prohibited, with both Malta and Greece subject to draconian EU legislation against insider trading and market abuse.

In an interview with the Greek news portal Newmoney.gr, Alexandros Exarchou, one of the majority shareholders of the bank, revealed that negotiations with HSBC, in which he personally participated, took place between mid-July and mid-August.

During this time, trading in Credia Bank’s shares on the Greek stock exchange surged by a significant 70% over 40 days.

In the interview, Exarchou also boasted about the quick conclusion of the preliminary deal with HSBC and how they managed to beat the competition.

“We managed to complete something that others could not in such a short time frame. The negotiations began in the last week of July and concluded, as you know, on 15 August. We exerted pressure on the other side to either close the process quickly or not engage at all. And today, we are fortunate to be the preferred bidder, awaiting only confirmatory due diligence for the acquisition to close. We expect the due diligence process to be completed on 5 September,” he said.

Contacted by The Shift, financial expert Paul Bonello said the sudden change and activity related to the Greek Bank’s shares is not only unusual under normal circumstances, but rather very suspicious.

“The price increase during the days of the negotiations and the official announcement of the Malta Stock Exchange amounts to a staggering 70% increase. It may be true that news travels fast in Greece, and without the need for a company announcement as well. Unless, of course, there is some other plausible explanation, or else it happens to be pure coincidence,” Bonello said.

“It looks like Credia Bank is going to make a killing with the purchase of HSBC’s local operations, and hopefully it will not be at the expense of the Maltese shareholder as a result of some firebrand quick sale,” Bonello added.

HSBC Malta is estimated to have a net asset value of €1.70 per share, resulting in a total €500 million. Bank valuations are normally negotiated on the basis of multiple annual earnings, which would lead to an even higher market capitalisation.

Exarchou is one of three Greek businessmen who control Credia Bank. Their company, Thrivest Holdings Ltd, owns 54.6% of the shares, while the Greek government holds the remaining shares.

Exarchou is currently facing criminal charges of instigating subsidy fraud and complicity in the misappropriation of EU funds in a case unrelated to the bank.

In case the deal goes through, it will still need the green light of the European Central Bank.