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Piraeus and Millennium negotiate a merger

07 February 2013 / 12:02:02  GRReporter
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Piraeus Bank is in talks with Millennium Bank and the official announcement of yet another merger in the Greek financial market is expected in the coming weeks. According to the Greek media, Piraeus has confirmed that it is in advanced stages of negotiations with the owner of Millennium Bank, Portuguese BCP.

"At this stage, the decision is not final and both investor sides should not make investment decisions based on whether the outcome of the talks will be successful or not. Piraeus Bank will inform the investment community about the course of the negotiations as regards the specific issue as provided by law", reads the statement of Piraeus cited by Ethnos newspaper.

The Portuguese BCP has also confirmed the talks with a message in Dow Jones. Piraeus is currently carrying out an audit in Millennium, which is expected to end in about two weeks. The share capital of Piraeus will increase by 200 million euro if an agreement is reached. The bank run by Michalis Sallas acquired last year the healthy part of the Agricultural Bank (ATEbank) and Geniki, which was owned by the French Societe Generale. The French also contributed to the increase in the share capital of Piraeus by 170 million euro. If Sallas’ team and the Portuguese from BCP reach an agreement, Piraeus would be a step closer to meeting the 10% level of increase in share capital by private investors and will avoid nationalization as assessed by analysts.

According to data of the Bank of Greece, the capital needs of Millennium amount to 399 million euro. BCP had covered 100 million euro of them by the end of 2012. Alpha Bank had also made an offer to the Portuguese bank in Greece, which apparently was not competitive. The sale of Millennium will close the circle of acquisition of foreign banks in the Greek market and will mark the beginning of the absorption of smaller local banks into the structures of larger financial institutions.

Meanwhile, financial institutions in Greece require that the increase in the share capital of new banks be carried out in two stages. The first is related to the recapitalization by the Greek Financial Stability Fund and the second to the recapitalization by the financial markets. "There should be 3-4 months between the two processes, which will help the market determine the prices of the share increase", says a financial expert quoted by

Representatives of banking circles consider it unrealistic for the recapitalization of banks to be completed in April this year. A more realistic forecast is that the regrouping and refinancing processes of the banking system will be completed as early as the middle of summer. Earlier this year, the National Bank of Greece stated that it needed an extended term of recapitalization and declared itself in support of the recapitalization in two stages after the completion of the merger with Eurobank.

In an interview for Reuters, Deputy Executive Director of Eurobank Nikolaos Karamouzis called for a revision of the terms of recapitalization and for the establishment of more attractive incentives to attract private investors. Karamouzis believes that a higher annual interest rate of around 7% on convertible bonds (CoCos) would be more attractive to investors. Another problem that prevents investors from participating in the process of recapitalization of the Greek financial system is the risk that comes with the conversion of bonds into shares. "I don't think new investors would put up money to cover yesterday's losses. They would be more willing to assume risks related to a bank's future profitability", said the financier.

Tags: EconomyCompaniesBanksMergerPiraeusMillennium
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