ATHENS--Greece's two largest lenders, National Bank of Greece SA
(NBG) and Eurobank Ergasias SA (EUROB.AT), have entered merger
talks aimed at forming a combined bank that would dominate Greece's
domestic market and would be among the biggest in southeast Europe,
officials from the two banks said Friday.
The merger, if completed successfully, is the latest sign of a
sweeping consolidation in Greece's banking sector as it struggles
to cope with the impact of the country's debt crisis. The combined
bank would have assets of some 180 billion euros ($233
billion).
One senior bank official said the merger could also involve
state-controlled TT Hellenic Postbank SA (TT.AT), in which NBG and
Eurobank each hold a stake of about 6%. The deal could also involve
a much smaller local player, Millennium Bank, a subsidiary of
Portugal's Banco Commercial Portugues SA (BCP.LB), in forming a
lender that would target large economies of scale and better access
to liquidity.
"There is a strong desire from both banks to move ahead with the
deal. There is no more time to lose," said one bank official
briefed on the negotiations. "Banks are currently under a lot
pressure from the central bank to go ahead and consolidate."
But the official also said the talks were only at an early
stage: "Talks are not that far down the line. We are at the phase
of "let's join up and take it from there.'"
The Athens bourse Friday suspended trading in the shares of
National Bank of Greece, the country's largest lender, and peer
Eurobank following press reports that the lenders are in merger
talks.
Earlier Friday, Greek website ToVima.gr cited unnamed sources as
saying that the two sides are close to a deal in an agreement
approved by the Greek government and the country's central bank.
Both of the banks refused to comment on the report, but are
expected to issue an announcement later Friday.
The transaction would represent a major step in the
restructuring of Greece's banking sector, which is under pressure
from the government and Greece's international lenders to
consolidate, even as it prepares for a giant EUR50 billion
recapitalization plan.
Greek banks need that money to rebuild their capital base after
a EUR200 billion sovereign-debt restructuring earlier this year
effectively wiped out their capital.
That recapitalization, expected to take place later this year or
early next year, will be largely underwritten by Greece's bank
rescue fund with money provided by Europe's temporary bailout
facility. But the banks hope that by becoming bigger and stronger,
they will also attract private investors to help shore up their
capital base as well as lure back nervous depositors who have taken
tens of billions of euros out of the banking system in the past
two-and-a-half years.
The merger talks also follow recent moves by Greece's two other
leading lenders--Alpha Bank AE (ALPHA.AT) and Piraeus Bank SA
(TPEIR.AT)--to acquire the Greek units of French lenders Credit
Agricole SA (ACA.FR) and Societe Generale SA (GLE.FR).
Those deals are still being negotiated, but final announcements
are expected in the next one to two weeks.
Write to Stelios Bouras at stelios.bouras@dowjones.com and
Alkman Granitsas alkman.granitsas@dowjones.com
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