National Bank of Greece SA, the nation’s biggest lender, and domestic competitor Eurobank Ergasias SA are in talks to merge, according to two people with knowledge of the situation.
The banks may announce the discussions as soon as today, said the people, who asked not to be identified because the plans are private. Talks are at an early stage and may not lead to an offer, one person said. National Bank will hold an extraordinary board meeting today in Athens, another person said. Officials at the Athens-based banks declined to comment.
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 SA. Eurobank gained as much as 9 percent before being suspended, valuing the company at 636 million euros ($827 million). 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.
“This would be a complementary combination in southern and eastern Europe, one with few overlaps, while synergy extraction in Greece would be challenging,” said Alexander Kyrtsis, a European banks specialist at UBS AG in London. “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.”
Overseas banks are also seeking to exit the country as concern lingers over the country’s future in the euro area. Credit Agricole SA is in talks with Alpha Bank SA on its Emporiki Bank unit, and Societe Generale SA is in discussions to sell Geniki Bank to Piraeus Bank SA.
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.
A combination of the nation’s two largest banks would create a lender with assets of about 178 billion euros, based on the banks’ first-quarter filings.