• Caught in the debt trap?

    Help us help you by taking our second annual Debt survey and you could win R3 000.

  • Rich man, poor man

    Culture change from below is the only way to overcome poverty, says Leopold Scholtz.

  • Tech bubble talk

    After the tech euphoria of 2013, the fast-moving sector has hit a speed bump.

Data provided by McGregor BFA
All data is delayed
Loading...
See More

Greek banking sector braces for super deal

Oct 07 2012 11:36 Sapa-AFP

Related Articles

Greeks rally against austerity plan

Motlanthe: Socialism needs fresh approach

France backs more time for Greece

Merkel: No Greek deal with Samaras

ECB: Greek exit viable but undesirable

Greece hoping for calmer EU waters

 
Athens - Greece's banking sector is bracing for what local media on Saturday called a super deal, following the announcement of the National Bank's offer to purchase the third-largest lender Eurobank.

Late on Friday, the National Bank of Greece (NBG), the country's top lender, announced a voluntary offer for "all outstanding common registered shares" of Eurobank.

If an agreement is reached, "current NBG and Eurobank shareholders will be represented by 75% and 25% respectively," according to the statement, with NBG offering "58 new shares for each 100 shares of Eurobank."

The group will become the country's new top lender, with combined assets of nearly €177.7bn, approximately €104bn from the NBG and €73.6bn from Eurobank.

It will be followed by Alpha Bank in second place and Piraeus Bank in third.

Greek financial newspaper Naftemporiki on Saturday claimed that NBG and Eurobank were "changing the (banking) map" while Ta Nea talked of a "marriage that will give birth to a giant."

The new group will create an "expanded banking group in Greece, that will act as the main pillar of stability for the country's financial system and will provide the necessary capital to back the country's economic recovery," said NBG head George Zannias in a statement.

"The exchange offer falls within the context of the ongoing consolidation of the Greek banking system," said Eurobank's CEO Nicholas Nanopoulos in another statement also released late on Friday.

Press reports regarding the merger that had been circulating since early on Friday prompted the Capital Market Commission to temporarily suspend the trading of the shares of the two banks at the Athens stock exchange.

The Greek banking sector has been urged to consolidate to bolster its defences and help liquidity, but several attempts to do so have failed, in a country that is heading for a sixth year of continuous recession.

As the country's economic crisis continues for a third year, its banks are now facing a liquidity crisis and are unable to lend to businesses, which in turn face bankruptcy even when they are sound, say local economists.

Earlier this week, French banking giant Credit Agricole announced it was in exclusive talks with Alpha Bank to sell its freshly recapitalised Greek subsidiary Emporiki.

Credit Agricole, one of the biggest banks in Europe by capitalisation, decided to put Emporiki up for sale after reporting in May a 75-percent drop in first quarter earnings because of its exposure to the Greek debt crisis.

Another French banking giant, Societe Generale, is in talks with Greece's fourth lender Piraeus Bank over the sale of its local subsidiary Geniki.

There was talk among local media on Saturday that the new NBG-Eurobank group is likely to purchase the state-owned Hellenic Postbank, which Greek Finance Minister Yannis Stournaras had described as "unviable" in late August.

The Athens stock exchange had said the small bank was unable to release its fiscal report for 2011 on schedule and local media have reported the government is considering splitting the lender in two parts, so as to sell the healthy sector.

A similar solution was used at the end of July for ailing state lender ATEBank, whose healthy part was absorbed by Piraeus Bank.

Greek banks suffered great losses after the heavily-indebted country and its international creditors agreed on a write-down of the value of privately-held government bonds by 107 billion euros earlier this year.

The debt restructuring was part of a broader EU-IMF bailout package for Greece, that has been keeping the financial system of the cash-stripped country alive.

The international rescue package includes up to €50bn to help recapitalise Greek banks and some 18 billion euros have already been disbursed to the four main lenders.

Earlier this week, the Bank of Greece gave local lenders some breathing space after deciding to lower their capital adequacy requirement because of delays in their planned recapitalisation.
greece  |  banking sector
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Add your comment
Comment 0 characters remaining
 

Company Snapshot

We're Talking About: Small Business

Standard Bank is looking for 12 entrepreneurs to participate in a 10-part TV series. They could win a R1m investment into their dream.
 
 

Ramphele: ANC can be defeated

The African National Congress can be defeated, Agang SA leader Mamphela Ramphele has told supporters in Temba near Hammanskraal.

 
 

Latest elections multimedia

Watch what happened when we blindfolded Helen Zille and asked her to eat random things
13 days to elections - news you need to know
11 Julius Malema quotes you'll never forget
DA won't get 30% - Zille

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...
Loading...