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Greece's Alpha Bank and Eurobank 'set to merge' Greece's Alpha Bank and Eurobank are to merge
(about 1 hour later)
Greece's second and third biggest banks are expected to announce their merger on Monday. Greece's second and third biggest banks, Eurobank and Alpha, are merging.
Shares in both banks were suspended on the Athens stock exchange pending an announcement. In a statement, the banks said that their merger would, "play a vital role in the economic recovery of Greece".
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. The Greek government has been trying to encourage banks to pool resources to help them cope with the country's debt crisis.
Shares in Greek banks have fallen by more than 50% this year. Qatar Investment Authority (QIA), which is already an Alpha shareholder, is expected 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. Shares in Greek banks have fallen by more than 50% this year, but they rallied in early trading on Monday.
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.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.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 bailout for Greece will involve its banks having to accept lower interest payments on their holdings of Greek government bonds, albeit over a longer period.The second bailout 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.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 planned merger between Eurobank and Alpha Bank comes as 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 bailout, having just increased its forecast for the contraction of its economy this year from 3.5% to 4.5%.The government goes into key talks with the European Union and the International Monetary Fund this week about the second bailout, having just increased its forecast for the contraction of its economy this year from 3.5% to 4.5%.