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Alpha Eurobank plans 13% market share in Bulgaria

29 August 2011 / 17:08:23  GRReporter
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Victoria Mindova 

The market share of Alpha Bank and Eurobank EFG in Bulgaria will reach 13% after the merger of the two financial institutions, clarified the press conference for the official announcement of the financial event. For now, the heads of the new entity refused to give details of how the merger of the Greek banks would affect their interests in the Balkan countries, but stressed that the presence of Alpha Eurobank in the region would remain significant.

Asked by GRReproter, "What are the consequences of the merger on your representations in Bulgaria and the other countries in the region?" the co-CEO of the new banking consortium Dimitris Mantsounis (Alpha Bank) stressed that the banks have no intention to reduce their presence on the local banking market. He neither denied nor confirmed the reduction of staff or other cuts in the Greek representations in Bulgaria.

 "Whether we will open or close branches in these countries on entirely arithmetic criteria is not a matter of discussion at the moment. We will act carefully," said Dimitris Mantsounis particularly for GRReporter.

"As to Bulgaria and the other Balkan countries I would tell that the main reason to open branches in these countries is because they are considered a key geographic area in which we should have presence," said Mantsounis. He made it clear that the financial crisis in Greece makes the neighbouring countries a wharf of the raging economic woes locally and increases their deposit portfolio.

"The issue is not whether our banks intend to withdraw from any country in the region. Quite the opposite, as we have activity abroad and mainly because we would like to attract deposits and leave a good impression, we will act very carefully. We are two relatively new banks on the markets in the periphery of the European Union and much attention in the management there is necessary," said Dimitris Mantsounis.

The cooperation between the two banks will result in benefits of around € 650 million per year over the next three years. The management bodies of the bank did not hesitate to emphasize that the cost cuts of the new financial institution would not come mainly from staff reduction but would be the result of reduced operating costs and streamlining of administrative activity.

The net present value of planned annual earnings compared to the 2010 data are worth about € 3 billion each year until 2014, and these amounts will be used to strengthen the capitalization of the bank. The bank invested in Alpha Eurobank half a billion euro from a Qatar financial fund, which proved crucial for the realization of this transaction.

The actual merger will be completed by mid-December, and then the bank will proceed to a capital increase by € 1.25 billion. After the completion of the procedure, the financial stability indicator of the bank Tier 1 is expected to reach 14%, which is considerably higher value than the 10% capitalization on this indicator required by the Bank of Greece.

We should not forget that important families of the Greek business take part in the management of Alpha Bank and Eurobank EFG. The three main shareholders remain Latsis family with 13%, Kostopoulos family with 4% and Paramount Services Holding Limited, which is controlled by Qatar and owns 17%. The shares of the new bank will consist of 57.5% stake of Alpha Bank and 42.5% of Eurobank EFG. The Co-CEO of the bank from Eurobank EFG Nicholas Nanopoulos was clear that the new bank will not only be the largest private commercial bank in the region, but will strive to become the most competitive and modern one.

Currently, it is the 23rd largest bank on the European banking market and in the words of Nanopoulos, despite the serious financial problems of the country it will seek ways to win its independence from the European Central Bank funding.

Nicholas Nanopoulos was adamant that the bank would not need the aid provided for the financial sector from the International Monetary Fund and the European countries and said, "If Qatar has spent half a billion euro for the bank, it is time the Greek citizens to return their deposits in Greek banks."

Asked "Why the merger is important for the markets?", the president of Alpha Eurobank and until recently president of Alpha Bank Yannis Kostopoulos said, "Nothing has happened in Greece so far, despite the recommendations, and the markets have seen it. Now things are changing. "

Kostopoulos, who in addition to being a doyen in the banking sector in Greece is one of its most respected members. His opinion about the positive effect of the merger two of the most influential Greek banks for the country confirmed instantly. The news gave the Athens Stock Exchange the kiss of life and following its sweeping decline in recent weeks, it closed with a 14.37% increase. Greek banks’ shares registered a record increase of 30%, which offset the depressing loss of value from the previous week and gave investors hope that the private sector in Greece will find its way despite the difficulties.

 

Tags: EconomyMarketsCompaniesGreeeMergerBulgariaAlpha EurobankBanks
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