Shareholders of Eurobank and Alpha Bank have approved a merger plan designed to create Greece’s largest lender with major backing from a Qatari fund, Eurobank said on Tuesday.
“The merger shall be completed with the appropriate ministry’s registration … which is expected to take place during the next few weeks,” the bank said in a statement.
“Following the above registration, Eurobank’s shares will cease trading in the Athens exchange,” it said, adding that new ordinary shares of the new bank, Alpha Eurobank, will replace them on the floor within a week.
An Alpha extraordinary meeting also convened on Tuesday to approve the merger, Eurobank said.
The merger will create Greece’s top bank and the 23rd-largest in the eurozone with 2 300 branches and €150-billion in assets.
Restore faith
Announced in August, the merger aims to restore faith in Greece’s cash-starved banking system amid rising concern about their exposure to rock-bottom sovereign debt.
Alpha bank chairperson Yiannis Costopoulos, who will head the new entity, told his bank shareholders on Tuesday that a capital increase of €3.9-billion inherent in the deal will be carried out in the spring of 2012, according to the semi-state Athens News Agency.
The capital increase, led by Qatar’s Paramount Services Holding Limited, will boost the merged lender’s top flight capital ratio to 14%, it was announced.
The Bank of Greece currently demands a 10% ratio, while an EU deal agreed in October demands 9%.
The capital increase will be undertaken by the three major shareholders — the two Greek families behind each bank and the Qatari fund, which will contribute €500-million and will control 17% of the new bank.
Stress tests
The merger and investment follows Eurobank failing the latest EU-wide bank stress tests in July.
Greek banks have seen their market valuation nearly halve since the start of this year, helping send the Athens stock exchange to a 15-year low.
And they stand to lose further as a result of a government debt rollover that is part of Greece’s latest eurozone bailout.
The sum of €30-billion from that package, agreed in October, will be set aside to help recapitalise Greek banks.
French investment bank Natixis last month estimated that Greece’s main four banks — National Bank, Eurobank, Alpha and Piraeus Bank — would need around €8.9-billion to keep their capital ratios at 9%.
Eurobank recorded a net loss of €588-million in the first semester. Alpha Bank fared equally poorly with net losses of €524.8-million. — AFP