UPDATE 2-Greece's Eurobank sells insurance unit to Fairfax for 316 mln euros

(Adds details on deal, background on companies, analyst
comment)
By George Georgiopoulos and Euan Rocha
ATHENS/TORONTO, Dec 22 (Reuters) - Greece's third-largest
lender Eurobank EURBr.AT agreed to sell an 80 percent stake in
its Eurolife ERB insurance subsidiary to Canada's Fairfax
Financial Holdings Ltd FFH.TO for 316 million euros ($345
million) on Tuesday, deepening ties between the two firms.
Toronto-based investment holding firm Fairfax, led by well
known contrarian investor Prem Watsa has made some large bets on
a Greek recovery, and it already owns a 17 percent stake in the
Greek bank after participating in a new recapitalization round
last month.
RBC analyst Mark Dwelle noted that the business being bought
by Fairfax looks like a profitable franchise and one which will
not require either capital or management attention in order to
contribute positive results.
"This is the type of opportunistic acquisitions Fairfax has
done repeatedly over the years - acquiring a good franchise that
wouldn't normally even come to market, at a fair price by being
able to be a fast, fair and friendly acquiring partner," said
Dwelle, in a note to clients on Tuesday, adding that Fairfax's
familiarity with the acquired company's management team is a
bonus.
The cash deal is in line with Eurobank's strategy of slowly
exiting from non-banking operations to focus on core banking. It
also complies with a restructuring plan approved by the European
Commission. Eurobank will retain a 20 percent stake in Eurolife.

The sale will also lift Eurobank's core tier 1 capital ratio
by about 26 basis points to 17.8 percent, according to the bank.
Eurolife is the third largest insurer in Greece with a
market share of about 10 percent, providing life and non-life
insurance products. It distributes its insurance products and
services through Eurobank's network in Greece and Romania.
"The long term collaboration with Fairfax is expected to
sustain the competitiveness and future growth of the Eurolife
group for the benefit of its customers and employees," Eurobank
said.
The deal, subject to regulatory approvals, is expected to be
completed before the end of the third quarter of 2016.
On closing, Eurolife and its subsidiaries will remain under
the leadership of current CEO Alexander Sarrigeorgiou, and his
team, said Fairfax in a separate statement.
"We look forward to working with the Eurolife team and our
partners at Eurobank to further develop the Eurolife business
over the long-term," said Watsa, in the statement.
Bank of America Merrill Lynch (N:BAC) and Mediobanca advised
Eurobank on the transaction.
(1 US dollar = 0.9168 euro)