Bank shares plummet in wake of decision to call off National-Eurobank merger

The executive boards of Eurobank and National Bank are due to meet on Tuesday in the wake of the announcement that the lenders will not be merge but will be recapitalized separately.

The Bank of Greece’s statement regarding recapitalization prompted bank shares to plummet on the Athens Stock Exchange on Monday morning.

At 11.30 a.m., share prices in Eurobank and National Bank had fallen by 30 percent – the limit at which trading is temporarily suspended

Alpha Bank shares plummeted by 16.8 percent and Piraeus Bank dropped 22.5 percent.

The general index was down by 2.8 percent.

The Bank of Greece ended speculation about the lender’s immediate future on Sunday night by releasing a statement saying that National Bank and Eurobank would remain separate entities ahead of their recapitalization by the Hellenic Financial Stability Facility.

The lenders’ boards will meet on Tuesday to decide on how to proceed with an increase in share capital.

The recapitalization of Greek banks is due to be completed before the end of this month.

The Bank of Greece’s statement followed a Sunday evening meeting between the creditors’ representatives and Finance Minister Yannis Stournaras in Athens. They are due to hold a new meeting on Monday.

The troika was sceptical about the National-Eurobank merger because of the size of the new lender that would have been created.

National has acquired 84 percent of Eurobank’s shares, but after the recapitalization by the HFSF its stake will shrink to just 3 percent.

A future tie-up between National and Eurobank is not ruled out, Kathimerini understands, but this will be up to the HFSF to consider at a later date.