TALLINN - A group of Greek and Swedish investors has acquired a majority stake in Preatoni Bank, Estonia's smallest financial institution, and Dimitrios Germidis, former president of the Central Bank of Greece, is slated to become the new chairman of the bank's supervisory council.
The bank's founder, Italian businessman Ernesto Preatoni, will retain a 20 percent holding in the bank after the deal, but the new owners have acquired the option to buy his shares out.
According to the final agreement, 55.2 percent of Preatoni Bank is now in the hands of Nikolaos Sarros, and 9.9 percent belongs to Sigma Real Estate, a firm that Sarros also controls.
Frosundaviksparken, a company controlled by Swedish investment banker Ulrich John, now owns 9.9 percent and Greek Emmanouil Karavelakis, a 5 percent stake.
Due to change of ownership the name of the bank will also change, the new shareholders said.
Speaking to reporters, Preatoni said the public attention surrounding him had become a burden to the bank.
"Although everything to do with me did not directly concern the bank, the indirect influences have nevertheless braked the development of the bank and tied executives' hands. Because of that I found it sensible to step out of this business," he said.
Preatoni has been dogged by accusations of underpaying millions of kroons in taxes.
The investors, for their part, said that a great deal of work needed to be done to rebuild the faltering financial institution.
"We bought Preatoni Bank because it was the only bank in Estonia that was up for sale. This bank must become a bridge between southern and northern Europe. We must become an international bank, there is nothing less that we'll be satisfied with," Germidis told the business daily Aripaev.
"Preatoni Bank doesn't exist for us - the entire bank has to be built up again from scratch," Germidis said.
He said the bank's new strategic business plan would be ready in a couple of months, but speaking to reporters last week he said that the new owners would strive to compete with local banks in the corporate banking segment, bring new foreign investments to Estonia and provide universal banking services.
"Competing on the highly competitive and well-developed retail market is not in our initial plans," he said, however.
Germidis named financial intermediation, asset management, provision of financial intermediation consulting services to corporate clients and lending as the bank's core business activities.
According to the former Greek central banker, Estonia remains attractive to foreign investors and the country's accession to the European Union is bound to boost international investors' interest.
Uhispank analyst Sander Danil said that the Estonian banking market wouldn't change after the Preatoni Bank deal, and the bank was likely to remain a niche financial institution.
"It's hardly likely that the idea behind the acquisition of the bank was to buy it and then start looking around for foreign investors who would like to do something here," Danil said. "They probably already have some more concrete plans."
Having worked on the Estonian market for over five years, Preatoni Bank has mediated more than 200 million kroons (12.78 million euros) of foreign investment in the Baltic country. Its major investment projects were the sale of shares in the Voru Juust (Voru Cheese) company, the share issue of the Kristiine shopping center and counseling in the merger of the Pro Kapital and Domina hotels.
Preatoni Bank was the smallest commercial bank in Estonia with total assets of 125.8 million kroons at the end of February.
The bank's loan portfolio is 79.6 million kroons, and deposits totaled 23.3 million kroons last month.
The bank posted a profit of 214,000 kroons in 2003 but made a loss of 432,000 kroons in the first two months of this year.
