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Increasingly insistent become scenarios for the implementation of powerful mergers that will transform the banking system in Greece. Greek newspaper Imerisiya refers to the formation of two large private banks, which will swallow their smaller brethren. This is expected to radically change the landscape of the banking market in the country. As GRReporter already wrote the first expected merger is of Piraeus Bank with National Bank of Greece. According to the article in Imerisiya while commercial banks in Greece are pretending they do not know anything, the market already discusses different scenarios which bank will be absorbed and what new mergers will follow. One of the strongest names voted among financial observers in the country is that of the National Bank (Ethniki), which is now one of the biggest players in the local market. 

The newspaper recalls the statement of Αlpha Βank President Yannis Xtopoulos, who said more than two years ago that in Greece there is no place even for two and a half banks. Statement, which now in a period of crisis sounds particularly relevant. 

The difficult economic situation in the country and the gloomy forecasts of financial analysts make the idea of encouraging mergers and partnerships an emergency exit for the weak banking system in Greece. Failure of major financial institutions in the private sector is strike that today Greece cannot afford. So the possibility is much bigger by the end of 2010 to see the final rearrangement of the banking market with bipolar scheme and with the participation of foreign players. However, whatever the changes are in the field, firstly financial institutions in the country must be stabilized and their balance sheets must be strengthened before we can speak of fruitful financing of the real economy. 

All initiated reforms in Greece until now have the ultimate goal to restore healthy economic development. In this regard, private banking sector must acquire new, more compact and stable form. The main task is to restore the confidence of foreign investors, many of whom withdrew their investments from the country. The stability of the public sector and the development and enforcement of adequate legal framework, are also prerequisites for restoring the lost trust. 

George Papandreou’s government plan this year includes the privatization of the Postal Bank of Greece. A candidate for this purchase is the Greek Agricultural Bank ATEbank, which also shows appetite for Attikis and the State Savings Bank. PASOK economic coryphaeus expect transaction revenues in excess of one billion Euros, and 6% have already bought the two merchant banks - Eurobank and National Bank of Greece. If privatization of Postbank is delayed there is a risk of delaying the strengthening of the banking sector as a whole. 

If the merger of the four banks takes place (ATEbank, Attikis, Postbank and Savings Bank), it will have a common equity of €3.7 billion and deposits of €43.9 billion, which include normal exposures, Greek government bonds and other type of investments. 

Meanwhile, National Bank of Greece is preparing to announce 75 percent drop in its purest income for the first quarter of this year, which is estimated to be about €80 million. Reducing the profit is in direct relation to rising interest rates in the sector. Bank shares have fallen with 44% since the beginning of 2010, also as a result of the economic destabilization of the Greek economy.