(Bloomberg) -- UniCredit SpA offered to buy the Greek state’s holding in Alpha Bank and agreed to acquire Alpha’s Romanian unit, in the first strategic deal struck under Chief Executive Officer Andrea Orcel.

Alpha Bank will receive €300 million in cash as part of the transaction for its business in Romania, which will be combined with UniCredit’s to create the third-largest lender by assets in that country. Alpha Bank will retain a 9.9% of the merged entity, according to a statement Monday.

UniCredit also sent a bid to the Hellenic Financial Stability Fund to buy the government’s 9% stake in Alpha Bank, without disclosing how much it offered for shares that were valued at about €269 million ($285 million) at the end of trading last week. Government officials indicated they welcome the offer.

UniCredit, led by Chief Executive Officer Andrea Orcel, has been looking for smaller-scale acquisitions in central and eastern European countries including Romania as it seeks to cement its role as one of the largest players in the region. The Alpha Bank deal comes just after S&P Global Ratings upgraded Greece to investment grade, the first of the big three rating firms to do so.

The deal is “a great start to the disinvestment process and a reflection of Greece’s regained credibility,” Alex Patelis, chief economic adviser to Prime Minister Kyriakos Mitsotakis, told Bloomberg News.

UniCredit rose as much as 2.5% in Milan, while shares of Alpha Bank were suspended from trading.

Greece has begun the process of divesting from its lenders after they reduced a bad loan pile that had swelled to more than €100 billion in a debt crisis started in 2010. The HFS has already sold its stake in Eurobank Ergasias Services and Holdings SA in early October and plans to start the sale of a 20% holding in National Bank of Greece next month. 

It said on Monday it will appoint advisers to examine UniCredit’s offer, which “involves a competitive process.”

Bank of Greece Governor Yannis Stournaras welcomed the deal, saying it reflects the country’s increased credibility and the significant progress in the Greek financial system. The government expects the economy to grow by 2.3% in 2023 and 3% in 2024, outpacing most of its European peers. 

If the purchase doesn’t go through, UniCredit committed to buying a stake on the market that’s “equal to the lower of 5% or a different percentage of shares which results from UniCredit investing an aggregate pre-agreed amount over a period of 24 months,” according to a filing.

For the Italian lender, the deal represents the best use of the bank’s capital, Orcel said in a call with analysts, reiterating that the bank’s ambitious shareholder distribution plan is sustainable. The CEO also stressed the value of opening up a new market for the distribution of its products and expand the bank’s “capital light” business. The purchase of a stake in Alpha Bank won’t lead to a takeover, he said.

The two lenders agreed on a partnership that will see Alpha Bank distribute UniCredit’s asset management and unit-linked products to its 3.5 million clients. In addition, the firms will create a joint venture in pension-saving products, with UniCredit becoming a 51% shareholder in AlphaLife.

In Romania, UniCredit is poised to jump ahead of Societe Generale’s BRD unit for the No. 3 spot by assets, after several unsuccessful attempts to boost its share locally. UniCredit was among lenders interested in buying the Bucharest-based unit of OTP Bank Nyrt., and it looked at First Bank last year, people with knowledge of the matter have said.

UniCredit is scheduled to report results for the third quarter on Tuesday.

With higher interest rates making banks more profitable, countries across Europe have been reviving efforts to dispose of stakes in their lenders, many of which still stem from the financial crisis some 15 years ago. Italy has hired investment banks for the sale of its controlling stake of Banca Monte dei Paschi di Siena SpA. ABN Amro Bank NV moved a step closer to full private ownership last month as the Dutch government cut its stake to just below 50%.

--With assistance from Irina Vilcu, Antonio Vanuzzo, Wout Vergauwen and Sotiris Nikas.

(Updates shares in sixth paragraph.)

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