Shares in Piraeus Bank surged over 16 percent on Monday after it agreed to take over the healthy assets of smaller rival ATEBank, a deal expected to strengthen the bank’s position in a sector battered by the debt crisis.
Greece’s central bank said on Friday that Piraeus would take over ATEbank’s performing loans and securities portfolio as well as its deposits. The government holds about 90 percent in ailing ATEbank, which needed a capital injection to continue operating.
“The market is reacting positively to the deal and it is waiting to see what will happen as far as the wider restructuring of the banking sector is concerned,» said Takis Zamanis, head of trading at Beta Securities.
Shares in Piraeus Bank were up 16.3 percent at 0815 GMT, outperforming the banking sector, which gained 7.5 percent.
Earlier on Monday, the Athens stock exchange said trading in shares of ATEbank is suspended following the deal.
ATEbank’s non-performing assets will be absorbed by Greece’s bank bailout fund, the Hellenic Financial Stability Fund, while some units will be taken over by the state.
Battered by the debt crisis and a deep recession, Greece’s banking system has relied on the European Central Bank and the Greek central bank for liquidity as access to interbank markets is closed. Fear that Greece could exit the euro zone has led to deposit outflows.
Greek banks are under pressure to consolidate in a bid to create bigger entities better able to survive the debt crisis. [Reuters]