Mega-bank merger still possible

A major merger in Greece’s banking sector remains possible, according to the country’s representative in the International Monetary Fund, Thanos Catsambas.

In a statement issued on Thursday, Catsambas noted the progress recorded in the banking system’s recapitalization process and stressed that Greek authorities have undertaken to develop an integrated strategy for the restructuring of the credit sector after the recapitalization, which should be completed by July 15.

Catsambas stated that, among other things, Athens’s strategy will examine the possibility of further concentration among the four systemic banks (National, Piraeus, Alpha and Eurobank). Greece will also examine the timetable for the sale to the private sector of the shares that are being taken by the Hellenic Financial Stability Fund (HFSF) during the banks’ share capital increases.

The statement further noted the decision for the Greek branches of the three main Cypriot banks (Bank of Cyprus, Cyprus Popular Bank and Hellenic Bank) to be sold to a Greek lender. The three networks of the Cypriot banks were acquired by Piraeus Bank.

Catsambas added in his statement that it is a main priority for the government to contain nonperforming loans, and said the return of deposits to the local credit system was a positive development.

Senior domestic bank officials are expressing concern about the option of a merger between any of the systemic banks, underscoring the huge size a merged group would have. They point to the fact that one of the main reasons cited by the country’s creditors in reversing the merger of National with Eurobank earlier this year was the size of the group that would have been created and the likely difficulties it would have faced in selling its shares to the private sector.

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