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The merger of the National Bank of Greece and Eurobank is a double-edged sword, Greek financial analysts state after the official announcement of the public offer for the acquisition of Eurobank. They consider that the strong point of the merger is the optimization of capital use and the improved prospects for connecting the national banking system with the international capital markets. The merger enables the achievement of the consolidation of the financial sector in Greece, which has been long anticipated and which will stabilize the market in the country and facilitate the recapitalization of new banks.

Improving the effectiveness of the new financial scheme will inevitably go hand in hand not only with a reduction in operating costs but with cuts of staff and closure of offices too. The head of the National Bank of Greece, Alexandros Tourkolias, sent a letter to employees this week, noting that the new banking scheme will work with employees of both institutions. According to the letter, the positions will be allocated objectively, in full transparency and in accordance with the skills of the specialists. This will inevitably lead to redundancies.
 
Profits before tax of the joint actions of the National Bank of Greece and Eurobank will be between 570 and 630 million euro by 2015. The company's assets will exceed 178 billion euro and will increase the opportunities for access to international capital markets, the National Bank of Greece says. The new scheme will gain a strategic place in the Greek market, as it will hold 32% of deposits, which reach 62.2 billion euro. Loans will amount to 87.3 billion euro or 36% of all loans granted in the market. The merger of the two banks will create a network of 925 branches throughout the country, which is 25% of the total number of bank offices in Greece.
 
The National Bank of Greece will retain its presence in Turkey through its branch in Finansbank and the new bank will hold the first place in the financial market in Bulgaria, Capital.gr. reports. The new bank will be present in nine countries of South Eastern Europe with a total portfolio of 109.7 billion in loans and 87.9 billion euro in deposits.

The draft agreement includes four main points, according to the edition of Sofokleos. The first one is associated with the maintenance of the main activities and the optimization of the resources used. The second task is to accelerate the agreement, taking into account the risks associated with the implementation of the merger. Thirdly, both banks’ managements want to utilize the available staff in the best possible way after the completion of the merger. Fourthly, financial experts emphasize that it is very important that the whole process be completed on schedule without compromising the effectiveness of the current activity.

The National Bank of Greece has announced that it will convene an extraordinary meeting of shareholders on 30 October this year. According to Naftemporiki, the meeting will discuss the issue of increasing the share capital by issuing new shares, which will be replaced with those of Eurobank’s shareholders if the financial institution accepts voluntarily the public takeover offer.

The insurance companies to the National Bank of Greece and Eurobank will sit at the table of negotiations too. The new group will consist of the National Insurance Company EFG Eurolife "Life" and EFG Eurolife "Damages." The merger between the companies would create a new insurance giant in Greece, which will hold more than 22% of the local market.

The two insurance companies are willing to join forces after the National Bank of Greece increased this year the share capital of the insurance company by 650 million euro. Eurobank did the same for EFG Eurolife in late 2011 with 27 million. The National Insurance Company has about 800 employees, not counting the 200 employees of the ICAP consulting firm. EFG Eurolife, in turn, has 300 employees. Local analysts claim the merger of insurance companies will be much easier and faster because of the different scopes of activities of the two firms. 75% of EFG Eurolife’s turnover is generated through the sale of insurance products in bank branches, whereas the National Insurance Company relies more heavily on its network of advisors and insurance agents.