Changes in Agricultural

The merger of Greece’s two largest banks, National and Alpha, was only the opening salvo in what is shaping up as another major round of restructuring in the sector. An indication of ongoing developments in the banking industry was yesterday’s meeting between National Economy and Finance Minister Nikos Christodoulakis and Agricultural Bank governor Petros Lambrou. Agricultural Bank is the largest bank in which the State still owns a majority stake. Christodoulakis and Lambrou did not make any announcements subsequent to the meeting, but it is known that they discussed the new conditions created by what is, by Greek standards, a mega-merger. Christodoulakis’s predecessor, Yiannos Papantoniou, had already announced that Agricultural Bank would enter into a strategic partnership with one or more banks and that it would be part of a strong group with a significant share of the domestic market. Compared to Papantoniou, Christodoulakis envisages a diminished role for the State, but agrees on the need for the bank to enter into a partnership, or merge, with another one. According to sources, the likeliest candidate for any such partnership is Commercial Bank, in which the State also holds a large stake. More significantly, Commercial has entered into a partnership with France’s Credit Agricole, which has transformed itself from a cooperative into a commercial bank and which can help Agricultural’s own transformation into a commercial, privately owned bank. The next 15 days will be crucial for the future of Agricultural’s future, as the government and the state-appointed management finalize their plans. Agricultural’s consultants Morgan Stanley will present a blueprint for the plan’s transformation into a commercial bank on Tuesday. More moves in the sector would allegedly include the sale of the small Postal Savings Bank – though without its extensive share portfolio – and the even smaller Deposits and Loans Fund. The latter, however, includes valuable assets, since civil servants use it to draw fully guaranteed housing loans. It is said that the EFG Eurobank Ergasias group, Greece’s second-largest following the National-Alpha merger, will acquire Postal Savings Bank

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