Regulatory hurdles delay merger of Greece’s Eurobank and National Bank of Greece

The planned merger of Eurobank Ergasias SA (ATH:EUROB) and its parent, National Bank of Greece SA (ATH:ETE), or NBG, has been postponed due to a regulatory authorities’ decision to recapitalise both banks separately, Eurobank said today.

Greece’s international creditors — the European Union (EU), the International Monetary Fund (IMF) and the European Central Bank — had previously objected to the combination over fears that it would create a dominant entity that would be difficult to recapitalise.

Eurobank said that its board would meet on 9 April to discuss a capital increase, which would be fully covered by Greece’s rescue fund, the Hellenic Financial Stability Fund (HFSF). The recapitalisation process is expected to be completed by the end of this month.

HFSF, the two banks’ future common shareholder, will take a final decision on the merger plan, Eurobank added.

NBG unveiled a voluntary all-stock bid to take over Eurobank in October 2012. The offer involved swapping shares of Eurobank for new shares in NBG at a ratio of 100 to 58, giving NBG’s current stockholders a stake of 75% in the enlarged bank, with the remainder to be held by Eurobank. The bid, which expired on 15 February, was accepted by 84.35% of Eurobank’s stockholders.

The combination was seen to create Greece’s largest lender with total assets of EUR174bn (USD226.5bn), EUR113bn of loans and deposits of EUR85bn, based on figures as at the end of September 2012.

National Bank of Greece to acquire rival EFG Eurobank Ergasias

National Bank of Greece (NYSE:NBG) said its shareholders had given the go-ahead to the planned acquisition of local peer EFG Eurobank Ergasias SA.

The shareholder meeting, which was held on Friday, followed two unsuccessful attempts of the bank to gather the necessary quorum. It convened with a quorum of 32.77%, which was still below the required 50% level. An NBG representative had told Reuters previously that the meeting would be final independently of the number of shareholders present.

NBG proposed to buy its rival in early October, offering to exchange 58 new shares for every 100 shares of the target. If the deal is successful, NBG shareholders will hold 75% of the enlarged entity, while Eurobank shareholders will hold the remainder.

The transaction, which is seen to create the country’s top lender, is subject to approval from the Bank of Greece and the Hellenic Financial Stability Fund (HFSF), Greece’s financial stability fund.