National, Eurobank set to join forces by end-February

The Capital Market Commission gave on Monday the green light to National Bank of Greece’s plan for its public proposal to Eurobank Ergasias shareholders, setting in motion the process that will see the proposal’s acceptance period start on Friday.

The law provides for the acceptance period of a proposal to last between four and eight weeks, so it is certain that the share exchange will have been completed by the end of February.

According to National’s proposal, Eurobank shareholders will get 58 shares of the new National for every 100 existing Eurobank shares. This means that National will issue about 320.7 million new shares, while the number of new National shares will amount to 1.276 billion chips after the transaction’s completion.

The success of the public offering can now be taken for granted. National has secured the irrevocable commitment of Eurobank’s basic shareholders – who represent some 44 percent of its share capital – to accept the public proposal.

Eurobank shares currently trade at a major discount on the Greek bourse compared with those of National, which constitutes a significant incentive for the acceptance of the proposal by a very high number of shareholders. At Tuesday’s close, the trade value of National came to 1.338 billion euros, while that of Eurobank stood at 390 million euros.

Eurobank will come under National’s control from the end of February, but the completion of the two lenders’ legal merger will not happen before the summer. On the issue of the recapitalization, it is not yet clear whether National and Eurobank will be recapitalized separately before the legal merger or if an extension will be sought so that their recapitalization takes place after they have legally merged into one entity.

The merger will create a mega-bank whose assets will be close to the country’s gross domestic product. The new group will be the biggest in the broader region of southeastern Europe, with assets of some 180 billion euros, a loan portfolio of 110 billion euros and deposits approaching 90 billion euros. The new National Bank Group will also boast 1,845 branches abroad and 952 in Greece.