Troika had sent bank merger ultimatum in March

Greece was given an ultimatum last month by the representatives of the country’s creditors to do away with plans for a mega-bank with the merger of National Bank and Eurobank, which has now been suspended, Kathimerini reveals.

An e-mail message dated March 26 and sent to Finance Minister Yannis Stournaras and Bank of Greece Governor Giorgos Provopoulos said that they should either immediately stop the process to merge National Bank and Eurobank or shrink the new group or have it sold in a short period of time.

It was sent from the e-mail address of the European Commission’s chief of mission to Greece, Matthias Mors, but signed by the heads of mission of the country’s other creditors, the European Central Bank and the International Monetary Fund.

“As you know, we have had doubts all along about this merger project,” the heads of the troika said in this rather informal correspondence, showing that their reservations were already known to the ministry and the BoG.

The troika went on to say that they had agreed to support the plan due to the synergies that would have stemmed from it. “However during the course of the recent review discussion it has become evident that NBG will not be able to raise private resources,” the e-mail added, before concluding with the ultimatum that on April 30 the merged bank would have to be shrunk and quickly sold.

This means the troika does not consider the suspension of the merger as a mere postponement, while ministry officials attribute the change in stance to the crisis in Cyprus.

Meanwhile, central bank chief Provopoulos noted yesterday that “the completion of the recapitalization process, the continuing trend of deposit returns and the gradual return of Greek banks and businesses to international capital markets create more favorable conditions for the economy,” forecasting that Alpha and Piraeus will be able to find the private funds to save them from nationalization.

Addressing a parliamentary committee, he also repeated that deposits at Greek banks are safe and fully protected, regardless of their level.

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