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Greek NBG says not formally told of objections to Eurobank deal
March 31, 2013 / 4:37 PM / 4 years ago

Greek NBG says not formally told of objections to Eurobank deal

ATHENS, March 31 (Reuters) - Greece’s National Bank, whose integration with subsidiary Eurobank has been questioned by the country’s international lenders, has not been told to halt the plan, an official at the bank said on Sunday.

National (NBG) took over 84.3 percent of Eurobank in February via a share swap as the Greek banking industry consolidates to cope with fallout from the country’s debt crisis and deep recession.

But the move has run into resistance from the “troika” of the European Union, European Central Bank and International Monetary Fund, bankers close to the talks told Reuters, and the merger may now be in doubt.

“NBG has not been notified verbally or in writing of any change of mind on the merger by DGCom, Greece’s competition Commission or the Bank of Greece,” a National bank official told Reuters on Sunday, declining to be named.

The rationale behind NBG’s takeover was to absorb Eurobank into the group to generate substantial cost savings, the official said. Any delay to the merger, which has the government’s blessing, would deprive NBG of those savings.

“NBG tendered to take over Eurobank aiming to merge it with the group. It didn’t do it to own Eurobank as a standalone subsidiary. This would not bring synergies of more than 600 million euros,” the official said.

That objective was stated in National’s tender offer, which was approved by DGCom, the European Commission’s Directorate General for Competition which enforces competition policy in the European Union, the NBG official said.

“NBG is going ahead with the legal merger process to absorb Eurobank, which has been approved by Greek and European authorities,” the official said. “Our goal is to complete the process by June.”

TROIKA ISSUES

Greece’s international lenders have raised issues over the size of the entity that would result from the merger relative to Greece’s economy and its banking sector.

The combined NBG-Eurobank group would have assets of 170 billion euros, almost the size of the country’s 190 billion euro gross domestic product and equivalent to 36 percent of total deposits in Greek banks. {ID:nL5N0CM0N3]

Fellow euro zone member Cyprus is already reeling from a banking crisis that has forced the closure of its second-largest bank, Cyprus Popular, and an unprecedented raid on deposits over 100,000 euros as part of an EU-IMF bailout.

Officials from the troika are due in Athens next week to resume a visit to inspect Greece’s progress in meeting the terms of its latest bailout, on which it depends to avoid bankruptcy.

On Saturday newspaper Kathimerini reported that the troika’s request that the merger be cancelled was a “red line” for the government since the tie-up is now on its final stretch. But officials are optimistic the concerns will be resolved, it said.

“As things stand it looks like the (troika) concerns outweigh the positives and the plot thickens,” said a banker close to the talks, declining to be named. “All this as we enter a critical recapitalisation phase.”

The two banks together need 15.6 billion euros in fresh capital to boost their solvency ratios to levels required by the central bank following losses from a sovereign debt writedown and impaired loans. Their combined market value is 965 million euros at current prices. (Editing by Catherine Evans)

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