By Giorgos Mantelas
The current condition of the local banking industry is reminiscent of the end of the 1990s, when the first phase of concentration of the Greek credit system was just being completed: Scenarios, rumors and information about who spoke to whom, who met with whom and what strategic moves were in the pipeline, had become the talk of the day.
Similarly, we are now entering the final phase of operations for the second major cycle of concentration of the country’s bank sector, with a delay of a decade.
Then, as now, the unknown factor is the key feature as the situation is prone to change. The difference today, however, is that there are some certainties on the horizon, and these are Emporiki Bank and ATEbank.
According to the latest information, National Bank of Greece (NBG) has been examining the case of Emporiki since the start of the year. Some times with more interest and others with less, Emporiki remains the focus of National as one of its main options. A marriage of National with Emporiki could also see Hellenic Postbank join them for the creation of a strong state bank, with some French assistance.
On the other hand, all signs point to an end of National’s interest in the case of ATEbank. The latter’s arrears are far too big, and even if the state covers them -- in the sense of splitting it between a good bank and a bad bank -- as official sources have suggested, the amount required for what is known as the Agricultural Bank of Greece to return into orbit is deemed prohibitive, estimated at around 1 billion euros. This possibility therefore appears ever more remote.
The second scenario that has gained popularity over the last few days provides for a new group with a completely different composition, but with National still at its core: This time the country’s biggest lender is to be joined by Piraeus Bank and Geniki Bank. The latter’s parent company, Societe Generale, has cut the lines of credit to its Greek subsidiary, according to a recent statement by one of its officials to Reuters.
Nevertheless, following an effort for restructuring that has lasted more than a decade, Geniki is now considered mature enough to make an active entry into the mergers process with the consent of its parent company, and that is exactly what it is going to do. A similar story is that of Emporiki and its French owner, Credit Agricole.
As far as Piraeus is concerned, sources suggest that it would not object to merging its activity with National’s although it has not yet given up eyeing ATEbank’s case, albeit with greater scrutiny due to the reasons already explained.
In the last few days there have also been some first contacts between Piraeus and Eurobank EFG as well. In the latter’s case, the chances of an approach to Emporiki are wearing rather thin, as it is said that the preliminary results of an internal monitoring process do not correspond to Eurobank’s original expectations. A source has said that more money than initially planned for will be required, although this does not mean that the interest by the Latsis-owned bank has been withdrawn.
The conclusion from all this information is that the whole of the banking sector is looking at options and alternative scenarios, with some having more chances of implementation than others while everything is in flux. It is estimated that it is only a matter of weeks before the horizon becomes clearer and the industry begins consolidating in earnest.