ECONOMY

Greek NBG says not formally told of objections to Eurobank deal

Greece’s National Bank, whose integration with subsidiary Eurobank has been questioned by the country’s international lenders, has not been told to halt the plan, an official at the bank said on Sunday.

National (NBG) took over 84.3 percent of Eurobank in February via a share swap as the Greek banking industry consolidates to cope with fallout from the country’s debt crisis and deep recession.

But the move has run into resistance from the troika of the European Union, European Central Bank and International Monetary Fund, bankers close to the talks told Reuters, and the merger may now be in doubt.

“NBG has not been notified verbally or in writing of any change of mind on the merger by DGCom, Greece’s competition Commission or the Bank of Greece,» a National Bank official told Reuters on Sunday, declining to be named.

The rationale behind NBG’s takeover was to absorb Eurobank into the group to generate substantial cost savings, the official said. Any delay to the merger, which has the government’s blessing, would deprive NBG of those savings.

“NBG tendered to take over Eurobank aiming to merge it with the group. It didn’t do it to own Eurobank as a standalone subsidiary. This would not bring synergies of more than 600 million euros,» the official said.

That objective was stated in National’s tender offer, which was approved by DGCom, the European Commission’s Directorate General for Competition which enforces competition policy in the European Union, the NBG official said.

“NBG is going ahead with the legal merger process to absorb Eurobank, which has been approved by Greek and European authorities,» the official said. «Our goal is to complete the process by June.”

Greece’s international lenders have raised issues over the size of the entity that would result from the merger relative to Greece’s economy and its banking sector.

The combined NBG-Eurobank group would have assets of 170 billion euros, almost the size of the country’s 190 billion euro gross domestic product and equivalent to 36 percent of total deposits in Greek banks. [Reuters]