John Paulson's decision to offload 35 million shares in Piraeus Bank on Monday night has raised questions within the investment community.
The sale, executed through an Accelerated Bookbuild Offering (ABO) at a 3.17% discount to the closing price, appears to contradict the bank's positive outlook.
On the same day, CEO Christos Megalou outlined ambitious profitability targets through 2028, projecting cumulative dividends of up to €2 billion over the next three years.
Yet, Paulson's move to reduce his stake from 18.62% to 15.82% and pocket €160 million suggests a different perspective—one of securing gains rather than betting on long-term growth.
Sources familiar with the transaction note that conducting the ABO on the same day as the bank's annual results helped Paulson sidestep additional disclosures and regulatory hurdles. While strategically sound, the sales triggered speculation about where exactly the 2.8% stake he offloaded ended up.
Market rumors suggest it landed in specific hands—so specific that the term "free float" may not fully apply.
The market's reaction will determine whether Paulson's move is seen as prudent risk management or an early warning sign. By cashing in his profits, he may have inadvertently undermined confidence in the stock. Even with a reduced stake of 15.82%, any decline in Piraeus Bank's share price would still impact him directly.
Meanwhile, concerns are mounting over the bank's ability to sustain its dividend policy. Despite CEO Megalou's reassurances that the recent deal with private equity firm CVC for Ethniki Insurance will not affect dividend payments, investors remain skeptical. The bank's stock declined following the announcement, reflecting doubts about whether it can deliver net profits of €1.1 billion this year, particularly as interest income is expected to decline in 2025.
Even if fee-based revenues hold steady, external factors such as political cycles and global geopolitical tensions add further uncertainty. Some wonder whether management could offset lower revenues through cost-cutting, but so far, Megalou has not signaled such an approach. Additionally, the €469 million acquisition of Ethniki Insurance will increase costs and is expected to weigh on Piraeus Bank's capital position by approximately 150 basis points.
To reassure investors, Megalou will need to offer greater clarity on how the bank intends to maintain its promised dividend policy amid these financial pressures. Until then, skepticism will persist.
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