National Bank of Greece SA, the nation’s biggest lender, offered to acquire domestic rival Eurobank Ergasias SA (EUROB) in a bid to retain its market dominance as Greece’s debt crisis forces a wave of mergers.
National, with a market value of 2 billion euros ($2.6 billion) will offer 58 new shares for each 100 shares of Eurobank, the Athens-based lender said in an e-mailed statement today. The new entity, to be called NBG Group, will have 178 billion euros in assets, 110 billion euros in loans and 87.9 billion euros in deposits, National said.
“This offer announced today aims at creating an expanded banking group in Greece that will undertake the important role of being a pillar of stability in the Greek financial system and extending the financing needed to support Greece’s economic recovery,” Georgios Zanias, National’s chairman and a former finance minister, said in the statement.
Greece is overhauling its banks after they sustained losses on their holdings of domestic government bonds in the country’s debt swap, the biggest sovereign restructuring in history. The country obtained a 130 billion-euro bailout in March from the European Union and the International Monetary Fund that earmarked 50 billion euros for recapitalizing the banks.
Eurobank Chief Executive Nikos Nanopoulos said in a separate statement that the bank would evaluate the offer “in a constructive spirit.”
Nearly 44 percent of Eurobank’s shareholders agreed to tender their shares, National said. National Bank shareholders will meet on Oct. 30 to approve the deal, which is subject to regulatory approvals. National will hold 75 percent of the new entity, once the offer is complete.
“This would be a complementary combination in southern and eastern Europe, one with few overlaps, while synergy extraction in Greece would be challenging,” Alexander Kyrtsis, a European banks specialist at UBS AG in London, said before the offer was announced. “The banks don’t want to be the last and be forced to buy whatever is left as consolidation gathers pace. If it happens, the combined bank will still need additional capital, though Eurobank will benefit from improved funding.”
National Bank jumped as much as 6 percent in Athens trading before being suspended after To Vima reported that the lenders are in merger talks that may also include Hellenic Postbank (TT) SA. Eurobank gained as much as 9 percent before being suspended, valuing the company at 636 million euros.
Overseas banks are also seeking to exit the country as concern lingers over the country’s future in the euro area. Credit Agricole SA (ACA) is in talks with Alpha Bank SA on its Emporiki Bank unit, and Societe Generale SA (GLE) is in discussions to sell Geniki Bank (TGEN) to Piraeus Bank SA. (TPEIR)
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