Bank mergers urged as solution

As two players in Greece’s banking landscape move forward with steps to shore up their capital base, Finance Minister Giorgos Papaconstantinou called on local lenders to join forces as a means of getting through the downturn. «It is time that banks made moves to help prepare them for the next day. The environment has changed,» he said late on Thursday. «The longer that moves are delayed, the more banks will be forced to adjust to the facts, rather than shaping them themselves.» Papaconstantinou’s views follow comments from Bank of Greece Governor Giorgos Provopoulos earlier this week also urging lenders to hook up and think about their strategic options. The resilience of Greek banks is seen as being severely tested this year, as credit growth drops off sharply, bad loans rise due to the recession and liquidity concerns linger. Analysts played down the possibility of any mergers taking place in the short term, questioning the possible benefits of any domestic takeover activity. «With so many senior officials taking about merger activity, it makes you think that something is brewing,» said a broker. Stocks in Bank of Cyprus and Geniki Bank, the Greek unit of France’s Societe Generale, came under heavy selling pressure on the Athens bourse yesterday as they both move ahead with a rights offers. Bank of Cyprus, the biggest lender on the eastern Mediterranean island, declined as much as 6.4 percent during the session on the Athens bourse before ending down 5.56 percent at 3.40 euros. On Thursday, it announced plans to raise 345 million euros, offering shareholders two new shares for every seven held, at 2 euros apiece. National P&K Securities cut its share-price estimate on the lender to 4.70 euros from 5.50 euros. Meanwhile, Geniki Bank received shareholder approval yesterday for a 339-million-euro rights offer, by offering three new shares for every one held, at 3.19 euros apiece. Geniki Bank stocks fell 5.56 percent to 0.34 euros.

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