CVC Capital Buys 90% of National Bank of Greece Insurance Unit

CVC Capital Partners agreed to acquire 90% of National Bank of Greece SA’s insurance business after a years-long search for a buyer.

The private equity firm paid an amount that values the entire Ethniki unit at 505 million euros ($596 million), the lender said in a statement Friday. That includes an “earn-out” payment of up to 120 million euros, which will be subject to meeting some agreed performance targets.

The disposal raises by around 60 basis points National Bank of Greece’s capital buffers as it continues to clean up bad loans on its balance sheet. It’s also delivering on a pledge to the European Commission after the financial crisis that it would try to offload the business, which offers both life and non-life policies.

This year has seen a flurry of deals in the insurance industry, driven by European giants seeking to divest peripheral businesses to streamline their operations. CVC, one of the private equity firms with the most experience in financial services deals, has invested in lenders, insurers and payments firms. It already owns French insurance broker April as well as specialty property and casualty insurer Fidelis.

National Bank of Greece is also selling a 6.1 billion-euro portfolio of bad debt as it seeks to cut its non-performing loan ratio by more than half. Pacific Investment Management Co. and a consortium backed by Bain Capital are among preliminary bidders for the assets, people with knowledge of the matter have said. The loans are a legacy of the country’s decade-long debt crisis, which saw economic output fall by around 25% and unemployment reach as high as 30%.

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