Greece's Eurobank EFG, Alpha Bank Set for 2012 Merger - Report

Finance | August 28, 2011, Sunday // 08:27|  views

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Eurobank EFG and Alpha Bank, two of Greece's major banks with Bulgarian subsidiaries, are about to announce an all-share merged, according to a report.

Greece's second- and third-largest banks are to merge by 2012, and the merger will be followed by a capital injection of EUR 500 M by Qatar, The Financial Times reported, citing undisclosed senior executives from both banks.

The merger of EFG Eurobank and Alpha Bank "would create the euro zone's 25th biggest bank" following the capital injection, according to senior executives, the paper said, quoting one executive as saying, "You can consider this a done deal."

The merged entity of Eurobank EFG and Alpha Bank would have about 8 million customers in 10 countries across southeast Europe. Its combined deposits would amount to EUR 80 B with total assets at EUR 150 B.

Eurobank EFG and Alpha Bank are among the five Greek banks with a combined share of 30% of the Bulgarian banking services market. Eurobank EFT owns Postbank Bulgaria, while Alpha Bank has its subsidiary Alpha Bank Bulgaria.

The reported Eurobank EFG-Alpha Bank merger would create the third largest bank in Bulgaria with assets totaling BGN 7.9 B (EUR 4 B). As of end-June 2011, Eurobank EFG's Postbank has total assets amounting of BGN 5.85 B, while Alpha Bank Bulgaria's assets come to BGN 2.08 B.

The third largest bank in Bulgaria at present is United Bulgarian Bank (UBB) with assets totaling BGN 7.014 B, which itself is also Greek-owned – it is a subsidiary of the National Bank of Greece (NBG).

Details about the future merger of Greece's Eurobank EFG and Alpha Bank would be announced on Monday, following separate meetings of the two banks' boards, according to The Financial Times.

The paper reminds that Qatar's ruling family already holds a 4.5% equity stake in Alpha Bank. Yannis Costopoulos, Alpha's chairman and a leading shareholder, would become chairman of the new entity.

"The aim is to complete the deal by the end of this year ... the merged entity would then go for a rights issue early in 2012," said another person with knowledge of the deal.

In February 2011, Alpha Bank rejected an all-share merger proposed by National Bank of Greece – the country's biggest lender – under the Greek government's policy of pursuing consolidation in the sector.

EFG Eurobank, which is 40 per cent controlled by the Swiss-based Latsis family, has held unsuccessful talks merger talks with NBG, according to people familiar with the discussions, the FT says, adding that the proposed merger comes at a time of increasing uncertainty for Greek lenders, with a 21% "haircut" on their large portfolios of Greek bonds looming as the government puts together a EUR 135 B package of debt swaps and rollovers as part of its second bail-out by euro zone partners.

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Tags: greece, banks, banking, Greek banks, Eurobank EFG, Eurobank EFG Bulgaria, Alpha Bank, Postbank, National Bank of Greece, National Bank of Greece SA, NBG, UBB, United Bulgarian Bank, merger, Qatar, Qatar Investment Authority


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