Alpha-Eurobank merger is stalling

The ambitious plan of merging two of Greece?s three biggest lenders, Alpha Bank and Eurobank EFG, may be suspended after all, if indications are anything to go by.

Alpha Bank on Monday referred to a disproportionate impact on the two banks from the implementation of the debt swap plan (PSI+) stressing that it was expecting the completion of PSI talks so as to call a general meeting and reach a decision on the issue.

In a bourse filing the bank referred to the uncertainty over the PSI terms cited in the November 15 board decision that had approved the merger, which led the board to make its decision based on the original debt swap plan, from last July.

On the other hand Eurobank announced that ?all necessary permits have been collected and all that remains is the formal stage of the signing of the deed.? It countered that the new PSI terms, as agreed at the October eurozone summit, were already known when the November 15 board meetings took place, and the final impact of PSI was not set as a condition or reservation for the completion of the merger. Eurobank added that the merger would create significant benefits for the Greek economy.

Analysts suggest that in the last few weeks there have been some behind-the-scenes problems in the completion of the merger process as the considerable expansion of the haircut in the context of the private sector involvement changed the balance agreed when the merger was announced in August.

Given the bad conditions in the markets there are considerable worries as to whether the deal can now be completed. The capitalization of the two lenders is in historic lows and the sale of their assets will be particularly difficult.

The Finance Ministry issued a statement late on Monday expressing the government?s displeasure with the course of the deal, underscoring that developments on PSI had been known.

Still, there are some analysts who argue that the two banks could examine the new conditions and proceed to the necessary adjustments that would see the merger take place after all.

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