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.