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Bank mergers are like weddings - while both newlyweds do not appear in the church and covenant say "yes" the thrill "will it happen or will it not" is still there. In the refined lounges of Athens currently the most mundane topic for debate is the forthcoming (?) union of two of the largest private Greek bank Alpha Bank and Eurobank. Media are competing to quote first hand sources, who either take part in the negotiations or follow them with extreme caution and very closely, in order to communicate how close to compromise are both sides.
    Without pretending that we have first hand information, but building upon strong financial logic to the unification of the two banks stand (at least) three major obstacles:
1. The balance of the shares. As GRReporter already wrote, the decisions regarding the merger of banks are hard to take because at least one of those who decide will lose his job. In this particular case this is the president of Alpha Bank Yannis Costopoulos who owns 9 percent of the shares of the bank. In the event of a merger with Eurobank, he will become second largest shareholder after Spiros Latsis, whose family holds between 44 and 45% of Eurobank. Those who know the nature of Yannis Costopoulos argued that the position of second in the line was never of interest to him.
        Of course, to this delicate conflicts of interest Spiros Latsis, who incidentally is the richest Greek, has found a solution. The model has already been tested in the privatization of the National Oil Company of Greece ELPE and it works. Then Latsis gave 100% of the company's management to the Greek State for the next five years, although he had a larger part of the shares than the Greek state. Something similar is currently offered also to Yannis Costopoulos.
2. The new banking association will have to pay the Greek state 2 billion euros for the privilege shares it holds in the two banks - Alpha and Eurobank. This means that the new banking colossus will have to increase their equity capital by more than 2 billion euros, most probably by 3 billion. This amount is too large to be taken out from anybody’s pocket just like this. Will the biggest shareholders Latsis and Costopoulos agree to make such an investment? It’s a delicate issue.
3. The most serious obstacle facing the merger of the two banks is the third and it is called liquidity. Both banks have serious difficulties with it. And they are no exception. Several days ago the president of the National Bank of Greece and the Union of Greek Banks Vassilis Rapanos officially admitted that the financial institutions in the country have no money. Currently Eurobank owes to the European Central Bank 20 billion euros, and Alpha bank - 15 billion euros. I.e. together the amount is 35 billion euros. The new banking colossus can not buy money from the markets. Foreign investors are reluctant to lending money to the Greek banks, because they consider them to be with too high risk. Famous economists also said before GRReporter, that banking unions are unlikely because they would not solve the basic problem of the banks - liquidity. What then is the purpose of a merger of Alpha Bank and Eurobank? President of the European Central Bank Jean-Claude Trichet has already announced that emergency measures to stabilize the banking system in the eurozone can not continue forever. And he set a time - until January 2011. And then what? Loans to Frankfurt will have to be returned. Spiros Latsis undoubtedly will have to find a solution to this problem as well before relating his business with Yannis Costopoulos.

    But otherwise the desire of everybody to have a wedding is understandable. If the families of Alpha Bank and Eurobank relate for all times, it will form the largest financial institution in the country, which will manage capital for the amount of 177 billion euros - 68 billion is the dowry of Alpha Bank and 109 billion of Eurobank. Out of these, 83 billion euros are investments and 110 billion euros are loans. In the new colossus will work 38 thousand people and it will have 2,600 branches, 1,760 of which will be outside Greece.
    "It is not important to be the biggest, the most important thing is to be the best," said a senior manager of the group of the National Bank of Greece for GRReporter. This is also the dilemma standing before Spiros Latsis and Yiannis Costopoulos. Because none of them would want to see their bank Titanic to sink.