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Greece's Alpha Bank and Eurobank 'set to merge' | Greece's Alpha Bank and Eurobank 'set to merge' |
(40 minutes later) | |
Greece's second and third biggest banks are expected to announce their merger on Monday. | Greece's second and third biggest banks are expected to announce their merger on Monday. |
Shares in both banks were suspended on the Athens stock exchange pending an announcement. | |
Banking sources said that the two would join up to help them cope with the country's sovereign debt crisis and avoid having to tap into the country's liquidity support mechanism. | Banking sources said that the two would join up to help them cope with the country's sovereign debt crisis and avoid having to tap into the country's liquidity support mechanism. |
Shares in Greek banks have fallen by more than 50% this year. | Shares in Greek banks have fallen by more than 50% this year. |
Qatar Investment Authority, which is already an Alpha shareholder, is likely to take a bigger stake in the new bank. | Qatar Investment Authority, which is already an Alpha shareholder, is likely to take a bigger stake in the new bank. |
QIA holds 5% of Alpha and is expected to take 15% of the merged entity. | QIA holds 5% of Alpha and is expected to take 15% of the merged entity. |
It has been reported that the new bank will be called Alpha Eurobank and will be the biggest bank in southeastern Europe, with assets of 150bn euros ($218bn; £133bn), 80bn euros in deposits and 2,000 branches. | It has been reported that the new bank will be called Alpha Eurobank and will be the biggest bank in southeastern Europe, with assets of 150bn euros ($218bn; £133bn), 80bn euros in deposits and 2,000 branches. |
Shares in other Greek banks rallied in early trading, having fallen sharply last week, although Alpha and Eurobank were suspended. | |
"The Athens stock exchange... has decided to suspend trading in their shares until investors are informed about the results of [the two banks' ongoing] board meetings and the terms of the deal," the bourse said in a statement. | |
An announcement is expected at about midday BST. | |
Eurobank has recently sold its Polish subsidiary and promised to raise its capital further after failing EU-wide bank stress tests. | |
As major debtors of the Greek government, Greek banks have fared particularly badly in the sovereign debt crisis, surviving only with the assistance of the European Central Bank. | |
The second bail-out for Greece will involve its banks having to accept lower interest payments on their holdings of Greek government bonds, albeit over a longer period. | |
Alpha Bank rejected a merger offer from the country's biggest lender, National Bank, in February. | |
The merger between Eurobank and Alpha Bank would be rare good news for the Greek government, which has been calling on the country's banks to pool their resources. | |
The government goes into key talks with the European Union and the International Monetary Fund this week about the second bail-out, having just increased its forecast for the contraction of its economy this year from 3.5% to 4.5%. |