By Marcus Bensasson

National Bank of Greece SA, Greece’s biggest lender, jumped in Athens trading after it offered to acquire its largest domestic rival, Eurobank Ergasias SA, with an all-share offer to retain its market dominance amid a wave of Greek bank mergers.

National Bank shares surged 11 percent to 2.32 euros at 11:20 a.m. in Athens, after rising as much as 18 percent earlier today. Eurobank shares gained 9.4 percent to 1.28 euros, after earlier increasing as much as 17 percent.

National Bank, with a market value of 2.6 billion euros ($3.4 billion), will offer 58 new shares for 100 shares of Eurobank, the Athens-based lender said on Oct. 5. The new entity, to be called NBG Group, will have 178 billion euros in assets, 110 billion euros in loans and 87.9 billion euros in deposits, National Bank said.

“This mega-merger changes radically the landscape of the domestic banking sector, with the new entity becoming by far the largest domestic financial institution,” Maria Kanellopoulou, an analyst at Euroxx Securities SA, said in an e-mailed note today. “Nevertheless, we highlight the high expected integration costs, as well as the implementation risk, as the two lenders have different corporate cultures.”

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. 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.

The nation’s third-biggest lender, Alpha Bank SA, which is in talks with Credit Agricole SA to buy the French bank’s Greek unit Emporiki Bank SA, fell 3 percent to 1.97 euros. Piraeus Bank SA, which in July agreed to buy the healthy part of state- controlled Agricultural Bank of Greece SA, fell 1.8 percent to 49 euro cents.

[Bloomberg]