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The wedding between Alpha Bank and Eurobank EFG in Greece has officially been cancelled. The main reason was that the new bank, resulting after the merger of these two institutions, would need a cash stimulus of nine billion euro. Such a backup would certainly lead to the nationalization of the bank, financial experts are commenting, which would not be allowed by the shareholders. The news was spread after the general meeting of Alpha Bank shareholders. Yiannis Kostopoulos, the president of Alpha Bank, said after the meeting, "The new scheme will require a capital increase of nine billion euro and as president of the institution I cannot accept this under the present economic conditions."

Bank recapitalization in Greece will start this week and the Greek Financial Stability Fund will receive the first 18 billion on Friday, as agreed on with the European institutions under the bailout agreement. The needs of the new mega-bank are too high and if it accepted a nine-billion aid, it would have to give a substantial share of the stakes to the state. This perspective has made the management bodies of both institutions stop the merger, which could be a big step in optimizing the banking system in Greece, according to Kostopoulos.

The first tranche from the European Financial Stability Facility will be allocated to the four largest domestic banks - The National Bank of Greece, Alpha Bank, Eurobank EFG and Piraeus Bank. It should offset some of the damage caused by the Greek external debt haircut (PSI) and restore the minimum levels of capitalization required for the participation in the refinancing programmes of the European Central Bank.

Immediately after the elections on 17 June, the new Greek government must finalize the terms of bank recapitalization. Then, the Greek banks will be able to benefit from the total amount of 50 billion euro designated to backup the financial sector under the second bailout agreement with the euro zone countries and the International Monetary Fund. These funds will be available to local banks only if the bailout remains in force and is not cancelled, as some political forces have threatened in their election campaigns.

In the meantime, Reuters determined Greeks’ beliefs of being an integral part of the euro area as a modern myth of the land of ancient myths. The article entitled "Greeks embrace some new myths about life with the euro" describes the negation, in which a large number of people are living today, namely that their country might have to leave the union. The phenomenon that 75% of Greeks say they are "for" the euro, but 80% are "against" the bailout and the measures it brings, is defined as a Greek paradox. The promises of the radical left SYRIZA leader Alexis Tsipras are pleasing the voters and most of them are determined to believe him instead of the daily signals sent from Frankfurt and Brussels. There will be no money if Greece decides to ignore its obligations, say European leaders but people in the country of the warm sun and cold ouzo do not believe them.

The Organisation for Economic Cooperation and Development is not promising a bright future for Greece either, even if it remains in the euro zone. According to the report of the institution, recession in Greece will reach 5.3% in 2012. This is the fifth year of negative economic growth in the country. The first signs of improvement could be seen as early as in the second half of next year. Growth is not expected but a much lower recession of 1.3% of GDP is forecasted and that in the case that the country is still in the euro zone. The report states that fiscal consolidation may slow down some of the structural reforms. They will start to bear fruit early in the second half of 2013 by better using the European Union funds to stimulate the economic activity in the country. Low consumption will reduce inflation to 0.8%. Unemployment will reach 21.1% this year and 21.6% next year. The budget deficit will be 7.6% of GDP in 2012 and 6.5% of GDP in 2013. Financial shortage in Greece will continue and banks are expected to actively support local economic activity.

The chief economist of the Organisation for Economic Cooperation and Development Pier Carlo Padoan urges Greece to meet its obligations under the bailout agreement as a condition for remaining in the euro zone. “Greece must stay in the euro zone. This requires the government to implement – and I stress to implement – the programme agreed with the Troika and other countries,” Padoan told Reuters, quoted by Naftemporiki. He made it clear that keeping Greece in the euro zone would be costly, but leaving the euro zone would be more costly for the country itself and for the other Member States involved in the bailout. However, this does not mean that it is impossible.