By George Georgakopoulos

National Bank and Eurobank are reportedly locked in advanced negotiations for the creation of a national champion in the banking sector, with a potential sum of assets of at least 177 billion euros. Trading of the two banks got suspended on Friday, with state TV NET reporting that an announcement is expected later in the day.

A press report on Friday morning triggered rumors about a merger deal between two of the country’s biggest lender, forcing the Capital Market Commission to temporarily suspend trading of National and Eurobank for the day in the Greek bourse, which early in the afternoon saw its benchmark posting gains of about 4 percent.

The governing boards of the two banks, that have a dominant presence in Southeastern Europe, too, are reported to be holding extraordinary meetings on Friday afternoon, with NET saying that a deal was imminent, citing unnamed sources.

After the decision by French group Credit Agricole to pick Alpha Bank as its preferred buyer for the sale of Greek subsidiary Emporiki Bank, announced on Monday, the other two suitors, National and Eurobank apparently decided to forge an alliance of some sort that is now set to lead not just to a merger between them but could also include the industry’s other prized asset, Hellenic Postbank (TT).

Reports in the Greek media have suggested that National and Eurobank have been eyeing TT after failing to land Emporiki, but given that both have small stakes in the state-owned lender it is near certain that should the two banks merge, they will also buy out TT to create a bank giant that will be healthy enough not to require extra capital from the recapitalization process and to be able to face the upcoming challenges of the banking sector, that sees bad loans increase by the day.