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Alpha Bank and Eurobank EFG have officially announced the cancellation of "engagement"

14 March 2012 / 18:03:11  GRReporter
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Another merger of two Greek banks has failed after Alpha Bank announced today that it will call another general meeting of shareholders to cancel the previous decision of 11 November for the merger with Eurobank EFG. The official release of the financial institution reads that the situation in Greece has changed significantly since the two banks announced their merger. Back then, they had proceeded to this step to prevent their eventual nationalization in case their losses from the Greek debt write-off procedure PSI were so large that their recapitalization would require the support of the financial stability fund. Alpha Bank recalls that the scheme under which banks would receive money from the fund was agreed under the PSI procedure and it does not necessarily require nationalization but rather ensures that their private nature will be retained.

The financial institution holds less Greek government securities than the bank dominated by the Latsis family.  Alpha Bank also recalls that the results of the verification of the credit records of Greek banks performed by the consulting firm Black Rock Solutions have become known in the meantime and turned out to be positive for Alpha Banka than for Eurobank EFG. Under the current conditions, Yiannis Kostopoulos' team offered a new contract to the Latsis family, but a compromise was not reached. It is an open secret that there has been a rift between the administrations of both banks since January.

At the same time, Eurobank EFG has not concealed its disappointment with the failure of the deal and accused Alpha for lost profits of over four billion euro, according to estimates of external consultants. "In such a difficult period for the country and after the successful debt restructuring, the banking system is required to meet the challenges of time and bear its responsibilities to the economy, shareholders and customers," reads the official release of Spiros Latsis’ financial giant. The institution denied the arguments of Alpha as non-responsive to the actual conditions. "At a time when Greek banks have capital and liquidity difficulties the opportunity of creating a financial institution that would be the 23rd largest in Europe has been missed," concludes the message.

A few days ago, the credit rating agency Moody's anticipated that Alpha Bank's chances of merger with another bank are minimal, despite the will of the Troika and the government to see the Greek financial institutions consolidated.

Despite the failure of the transaction, the shares of both banks on the Athens Stock Exchange have risen. Those of Alpha Bank have risen by almost 5% and those of Eurobank EFG - by 4%. "The merger cancellation may have caused new investment initiatives in the Greek banking environment," said Natasha Roumandzi from the stock exchange branch of Piraeus Bank. However, she explained the surge in prices of both banks and the rise of the index of the Athens Stock Exchange with the Fitch decision to increase the credit rating of Greece by 6 levels and make it B with a stable outlook.

 

Tags: Alpha BankEurobank EFGPSIMergerShareholdersLatsis familyAthens Stock ExchangeShares
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