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live Eurobank and the National Bank of Greece are planning a merger

05 October 2012 / 14:10:02  GRReporter
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Banking market consolidation in Greece continues and the merger of Eurobank and the National Bank of Greece is on the table of negotiations. Both banks’ managements are planning to join forces and create the largest financial institution in Greece. Financial circles in the country claim that Eurobank and the National Bank of Greece are very close to making the final decision to create the new scheme with the consent of the Bank of Greece. It is expected to become one of the strongest financial institutions in Southeast Europe.

There has been flirting between the two banks for years but now the difficult financial situation in the country is acting as a catalyst for the developments. The merger will significantly reduce the need of Eurobank and the National Bank of Greece for state aid, which they must receive from the Greek financial fund.

The merger process itself is difficult, Greek media emphasize. Upon completion of the negotiations between the two institutions, the European Commission on Competition should approve the merger. It is expected that the Commission will not impede the merger.
Social media exploded with the news of the "engagement" between Eurobank and the National Bank of Greece, and not all are of the opinion that this is a positive development. "This will be a black day for the Greek economy," a Twitter user said.

Shortly after the opening of the Athens Stock Exchange, the shares of both banks have been withdrawn from trading. A Greek financial analyst told GRReporter that it is a standard procedure in the presence of information on the merger of such large institutions. "The goal is to avoid unnecessary speculation, which will affect the processes of the market," he said.

Preceeding the decision of the Stock Exchange management, the shares increased significantly and the main indicator grew by 3% by 11:05 am, SKAI TV reports.

This summer, Eurobank split with its main shareholder, Spiros Latsis, who is one of the richest Greeks in the world and the owner of the financial group EFG. He held a 44.70% stake in the bank by July 2012, when he sold 43.55% of it to the nine younger heirs of the family. Since then, Eurobank has begun seeking strategic investors to pour fresh funds into the third largest bank in the country.

The changes made in the management board of the bank shortly after the split with Latsis show that the financial institution has found support from individuals who are active members of the real business. The board now consists of the president and CEO of the Greek branch of Coca-Cola (E3) George David, Ageliki Frangou - president and CEO of the shipping giant Navios Maritime Holdings Inc joined it in September and Nikolaos Stasinopoulos  - the president of the holding company operating in the steel sector VIOHALCO SA.

Before it became clear that the National Bank of Greece was in talks with Eurobank rumours spread that Piraeus Bank and Societe Generale were discussing the sale of Geniki Bank. "There is a preliminary agreement," a representative of Piraeus told Reuters earlier this week, according to whom it will take two weeks to conclude the negotiations. The French financial institution wants to sell its Greek branch and Piraeus seems the most suitable candidate. "The Hellenic Financial Stability Fund will have to give its approval when we finalize the numbers," sources close to the negotiations have said.

The deal between Eurobank and the National Bank of Greece was finalized on Friday night, Imerisia reports. It is expected to be signed and completed on Monday, 8 October. The new scheme holds assets amounting to 180 billion euro, the loan portfolio contains a reserve of 110 billion euro, whereas deposits reach 90 billion euro. It will play an important role in 12 countries. The first step after the merger is expected to be the offer for the purchase of the state-owned Postbank in which each of the two banks held 6.5%. The acquisition of the state-owned financial institution is not expected before the recapitalization of banks, which has been lagging due to delays in the tranche of the 31.5 billion euro aid. The lenders’ mission in Athens believes that Postbank is not sustainable and wants it privatized as soon as possible.

Tags: EconomyCompaniesEurobankNational Bank of GreeceMergerGreeceCrisis
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