Greek Banks Suspend Merger Talks
By NIKI KITSANTONIS
Published: April 8, 2013
ATHENS — Shares in National Bank of Greece and Eurobank plummeted 30
percent Monday after the two banks suspended merger talks because they
were unable to raise the required capital.
Multimedia
The move followed reports that the international lenders overseeing a
bailout of Greece had feared the creation of a megabank that would be
too big to fail. It came as concern grows in Europe about the threat
posed by large banks in small countries in the wake of the banking
crisis in Cyprus.
The new bank would have been the biggest in Greece, with assets of
around 180 billion euros, or $234 billion. Greece’s gross domestic
product was around 190 billion euros last year and is expected to
contract 4.5 percent in 2013.
The Bank of Greece, the country’s central bank, said late Sunday it had
received letters from Eurobank and National Bank of Greece saying they
had been unable to ensure that 10 percent of their share offerings would
be taken up by the private sector, in accordance with the country’s
agreement with its foreign creditors.
Authorities have not ruled out the eventual resumption of talks to
complete the merger. The deal was announced in October and talks were at
an advanced stage. A state banking support fund is to decide whether
the merger should proceed once the recapitalization of Greece’s four
main banks — National Bank of Greece, Eurobank, Alpha Bank and Piraeus
Bank — is completed, probably by the end of April.
Deposits at all Greek banks are guaranteed, the central bank’s statement added.
National Bank of Greece took over 84.3 percent of Eurobank in February
through a share swap as part of a broader plan to bolster Greece’s
banking sector, which has been shaken by bad loans and a private debt
write-down last year.
On Sunday, Finance Minister Yannis Stournaras reported “significant
progress on many levels” in discussions over Greece’s compliance with
the terms of its 130 billion euro international bailout, and said he
expected negotiations could be completed “in the next few days.”
Mr. Stournaras said there would be no further austerity measures such as
cuts to pensions and salaries. He said he hoped to conclude talks with
the so-called troika of international lenders — the European Central
Bank, the European Commission and the International Monetary Fund —
before an informal meeting of euro zone finance ministers in Dublin on
Friday, when Greek progress in economic reforms is to be examined.
The two sides are also close to agreeing on the number of installments
with which Greeks will be permitted to pay off debts to the state, a
Finance Ministry official said, referring to some 55 billion euros in
outstanding tax and social security payments. The official spoke on
customary condition of anonymity.
The troika has yet to respond to Greek requests to soften a contentious
property tax, which was introduced in 2011 as an emergency source of
revenue.
The mood in the Greek government’s talks with the troika over the
weekend appeared to be calmer than it had been at the end of last week,
when Mr. Stournaras reportedly challenged officials pushing for more
austerity to “take the keys to the ministry and give them to Tsipras.”
That was a reference to Alexis Tsipras, who leads the main leftist
opposition party, Syriza, which opposes the bailout.
A meeting on Sunday between Prime Minister Antonis Samaras and the
foreign envoys, during which he emphasized that austerity-weary Greeks
are unable to take more pain, appears to have helped ease the tensions.
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